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Zillow seeks to sell 7k homes for $2.8B after flipping halt

bloomberg.com

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Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#141

Post by epistasis »

jeffbee wrote: post #19
sremani wrote: post #11

Earlier quoted context omitted.

Projected population of US in 2050 is 458 million from the current 330 million. Given that underlying reality, housing is going to be an investment.

Real-dollar home prices plunged continuously from 1950 to 1970 while the US population increased by one third. Home price inflation is a policy choice, not a law of physics.

Exactly, and in that era the federal government financed massive amounts of new housing (for white people), with the intent of homeownership for nearly all white people.

And once homeownership became the norm, those same people started massive downzoning projects to prevent new homes from being built. And shortly after that, funding for public housing was gutted.

Which leaves us with the massive shortage we have now. We have plenty of money that is allowed to chase a smaller supply, as long as you can leverage your existing housing asset for a larger down payment. But all those people who didn't buy in the 1980s or earlier are at a massive disadvantage.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#142

Post by rossdavidh »

I have nothing of substance to add to the comments others have made, but would like to compliment whoever thought of the phrase "flipping flop" to describe Zillow's misstep here; Bloomberg should be kicking themselves for not using that as their headline.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#143

Post by sigstoat »

seanmcdirmid wrote: post #99
faet wrote: post #96

Earlier quoted context omitted.

https://www.forbes.com/sites/graisondangor/2021/06/16/the-ho... The U.S. built on average 276,000 fewer homes per year between 2001 and 2020 compared to the period between 1968 and 2000, according to the report which was covered earlier by the Wall Street Journal. Had building continued at the same pace, there would be 5.5 million more units of housing, the report estimated. To make up the shortage, the NAR report sa…

Why are you comparing a 19 year period to a 32 year period? Ah, I see it is a per year measure. Well, it isn’t weird that land runs out for new subdivisions. What is left is to build more dense (replace single family housing with apartments or town homes). Still, why is it zoning per se that is the problem rather than just the market? They have the same pricing problems elsewhere in countries with building booms (eg…

> Still, why is it zoning per se that is the problem rather than just the market?

dense housing is frequently not permitted by zoning. sometimes housing itself isn't permitted.

> What is left is to build more dense (replace single family housing with apartments or town homes).

yeah, that's exactly the thing that's banned in very many places where it would be most useful.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#144

Post by xibalba »

drnonsense42 wrote: post #67
cletus wrote: post #15

This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…

I disagree strongly with this sentiment. Clearly Zillow is not going to buy all the houses in America and turn us into serfs overnight - that is an absurd strawman. What? Zillow is far from the only actor here trying to enter this space. It's quite ridiculous to claim, as you are, that industrial-scale home speculation is doomed to fail since there are boom and bust cycles and therefore we don't need to worry. That's…

> Quant firms for the stock market in the early 90s

False equivalence. The real estate business which Zillow failed is massively capital intensive, whereas figuring out a quant strategy is not necessarily so. In other words, it is very possible to go out of business before a business model is worked out (assuming there is an undiscovered, workable business model).

Investors will not endlessly fund money losers, and Zillow is a huge money loser from both a income and cash flow perspective–a trend that predated their entry into the iBuyer space. Now you might say, the investor appetite for money losing Zillow is bottomless, just look at asset class X, which is totally unproven and yet has insane valuations. To which I would reply, "That is true until it isn't." One common characteristic of all financial bubbles is that its participants claim "this time is different."

Supposing iBuyers do become a significant force in the SFH market, so what? Large companies already participate directly in housing in a massive way. Who do you think built all of these apartments? Also, don't YIMBY's want to eliminate SFH anyway?

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#145

Post by whimsicalism »

jackorange wrote: post #118
whimsicalism wrote: post #114

Earlier quoted context omitted.

My ideal is for real housing prices to remain somewhat steady - ie. I don't like that I have to pay much more than inflation to get a house compared to what my parents pay. It'd be nice to be able to afford a house where I grew up without having to tie a ridiculous amount of my net worth up in this one very pricey illiquid asset, even if I could get the mortgage.

If you can accept technology changes over time (goodbye horse and carriage), and that society changes over time (hello LGBTQI rights), why is it unreasonable to accept the price you pay for goods will change? Naturally, its a given that's not the only change. The materials to build have changed, transporting them has changed, wages have changed. Prices are not going to be the same.

These are policy decisions being made that make it so it is harder to purchase housing near my job or where I grew up, as well as being net detrimental to economic growth (and the growth of wages and output which lowers prices).

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#146

Post by JumpCrisscross »

brendoelfrendo wrote: post #90
JumpCrisscross wrote: post #31

Earlier quoted context omitted.

> Zillow getting into flipping seems questionable to me. The customers are no longer aligned with the company on goals with something like this I'm currently looking to buy a house. Having a Zillow in between the seller and myself (as a dealer, not a broker) wouldn't be a slam dunk, but it would be worth some non-zero premium to me. (Just offering a counterpoint to the "uselessly driving up prices" narrative.)

Can I ask why? I'm also looking to buy a house and the Zillow offerings, from what I've seen, are not particularly competitive. They don't seem to care much about the quality of their housing stock. I'd also be leery of dealing with someone removed from the initial seller. It sounds like a great way to "launder" issues with the home where Zillow can say "eh, we didn't know about that."

> Can I ask why? I'm also looking to buy a house and the Zillow offerings, from what I've seen, are not particularly competitive.

I agree. (I'm not buying from them.) I am having to deal with sellers who change their ask at the last minute, have past financial issues (if something goes wrong and I have to sue, will they have assets?), want to stay through the winter, et cetera. In most home purchases, expedience isn't the most important thing for the buyer. For some, it is, and in those cases something like Zillow's offer in theory makes sense. (Counterpoint: homes aren't fungible.)

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#147

Post by EastOfTruth »

teraflop wrote: post #95
johnnyApplePRNG wrote: post #24

How on earth did a real estate analytics company lose money buying and selling homes in THIS market?

I'd like to point out that this article neither claims nor provides evidence that Zillow has lost money. For one thing, as discussed previously[1], Zillow earns commissions and fees when both buying and selling houses, so they may be making money even when the prices nominally show a loss. For another, even if the majority of the houses were sold at a loss, that statistic by itself tells you nothing about Zillow's ov…

Zillow has listed a staggering 93% of the hundreds of Phoenix homes it owns at a loss [1]

1. https://www.businessinsider.com/zillow-offers-ibuyer-sell-ph...

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#148

Post by olalonde »

drnonsense42 wrote: post #67
cletus wrote: post #15

This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…

I disagree strongly with this sentiment. Clearly Zillow is not going to buy all the houses in America and turn us into serfs overnight - that is an absurd strawman. What? Zillow is far from the only actor here trying to enter this space. It's quite ridiculous to claim, as you are, that industrial-scale home speculation is doomed to fail since there are boom and bust cycles and therefore we don't need to worry. That's…

> Quant firms for the stock market in the early 90s did not work overnight even though the market was much more inefficient than it is now. It takes time for groups of highly qualified and very smart people to figure this stuff out - but, they will.

This example works against you. Quant firms did succeed but they did not corner the stock market nor are they cause for concern. There is a long history of firms that failed to corner a market or become a monopoly. True natural monopolies are extremely rare and don't typically last very long.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#149

Post by nradov »

whimsicalism wrote: post #79
harryh wrote: post #75

Earlier quoted context omitted.

Decades of under-building due to restrictive zoning laws will do that.

Yes, that - plus the rapid reversal of white flight to the suburbs among young people in the last 10-15 years (more of an east coast phenomena). It is both a demand and supply problem, but short of creating a Hukou system I don't see any solution but building.

Another solution would be encouraging economic development in other areas instead of cramming increasing numbers of people into a small number of geographically constrained cities.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#150

Post by cletus »

whimsicalism wrote: post #32
cletus wrote: post #15

This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…

Sorry, youth here. The housing market remains screwed regardless of the actions of Zillow or Blackstone or whomever.

I sympathize. Unironically, I do. Truly.

Be very careful over-extrapolating based on known variables. That's my point.

For decades we've have the concentration of populations in a few urban centers because of employment opportunities and other factors. Two years ago, you wouldn't have even thought about that trend ending anytime soon.

Yet here we are with what seems to be the beginning of a structural change to the employment market to remote work for a significant number of potential jobs. We're not there yet of course. But this seems to have already been a boon to medium-sized regional cities (eg Boise).

This was all possible two years ago but it didn't happen. Covid was a big catalyst. No one predicted that.

Likewise, you see young people rejecting the 30 year mortgage, have kids then retire model that was the norm for Baby Boomers. Living remote, tiny homes, van life, etc.

I fully support residential real estate not being used for money laundering, hiding assets from governments and an exchange-traded asset class, to be clear. The focus there should be on the governments who create the rules that allow this to happen and not the players however.

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