Zillow seeks to sell 7k homes for $2.8B after flipping halt • Hacker News Board

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

#301

Post by dboreham » Tue, Nov 02, 2021, 5:20 PM UTC

BuckRogers wrote: post #272

game_the0ry wrote: post #255

Former real estate finance professional, here. If you were hoping this was a sign of the real estate market falling and perhaps its your chance to get a bargain, think again. > The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Institutional investors (Blackstone, Blackrock, Colony, et al) will be being in bulk,…

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

Just a note to say that the term for a mortgage in the USA is really up to the borrower. This is because you are permitted to pay back more than the specified loan repayment, any time you like. So you can make a 30-year loan into a 20 year loan if you want, or any term shorter than 30 years. The main benefit to a 15-year loan is that it (usually) has a lower interest rate than the equivalent 30-year loan.

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

#302

Post by trident5000 » Tue, Nov 02, 2021, 5:23 PM UTC

game_the0ry wrote: post #255

Former real estate finance professional, here. If you were hoping this was a sign of the real estate market falling and perhaps its your chance to get a bargain, think again. > The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Institutional investors (Blackstone, Blackrock, Colony, et al) will be being in bulk,…

Thats not how you look at this. If this were a strong market signal they would be selling to Blackrock at a profit and not a loss. The exchange value is down not up. There were equal buyers matched to sellers in 2008 as well when the market was cratering (not that we are in 2008).

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

#303

Post by SilasX » Tue, Nov 02, 2021, 5:24 PM UTC

medvezhenok wrote: post #274

adam_arthur wrote: post #140

Earlier quoted context omitted.

Yeah, I don't have my hopes up, particularly. Things are so good right now on pretty much every metric, they have to at least taper, though. I suspect they will use overly dovish language at the announcement though, which will spur even further speculation. But the unfortunate aspect of the current fed is that they care way too much about the markets. And they are very short term oriented. They're pulling the good ti…

Everyone looks at the FED, but there's an interesting counterintuitive hypothesis out there that it's not actually the FED that has anything to do with inflation. In the 1970s, it was international credit creation by banks that was not tracked by the FED that caused persistent inflation (and their attempts to control it were futile since they were not tracking it), and now it's actually the government stimulus combin…

Can't the Fed still be responsible for interest rates not compensating you for inflation? I wouldn't care nearly as much if not for that part.

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

#304

Post by BuckRogers » Tue, Nov 02, 2021, 5:24 PM UTC

randomopining wrote: post #282

BuckRogers wrote: post #272

Earlier quoted context omitted.

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

What's your dilemma? If you're gonna live there for 10 years, get a large utility out of the house in general and also owning your own place, then just go for it. If you're buying just to buy, then hold off.

My dilemma is balancing inflation risks through all this increased government spending, with short-term market timing. I think that these risks are more likely than ever, and imminent.

On the inflation risks. I really wish the Democrats would cancel all their ideas about child care and what not, and just shift the tax burden from the working class that punch a clock, to the investment class that live off of IRS-defined unearned income. So much easier, simpler, doesn't engage in designing society, rewards working, helps the economy more than anything else you could do through increased spending, and would be far more popular. But that's an aside.

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

#305

Post by noodle » Tue, Nov 02, 2021, 5:25 PM UTC

ineedasername wrote: post #30

Sounds like they got in too close to the peak (not to mention delays & increased costs in refurb) and didn't factor increased carrying costs on the potential that these would sit on the market a bit longer if they wanted to sell at a higher premium. A hard lesson for them that listing aggregation & analysis of the market is far different than direct investments & flipping. Flippers take a big risk and offset inevitab…

They hit the wall that most people are hitting. There are just not enough people out there to meet the demand right now for residential construction and remodeling. More people want work done, and fewer people are getting into the industry, so the calendars are booked and costs are going up.

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

#306

Post by alasdair_ » Tue, Nov 02, 2021, 5:25 PM UTC

cletus wrote: post #97

drnonsense42 wrote: post #67

Earlier quoted context omitted.

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…

> We really don't have any direct, past precedent for this type of situation Yeah, we do. Massive housing speculation in the mid-2000s. > The fact that Zillow failed on their initial attempt does not imply that this can't work I'm reminded of Gamestop here. Around the time $GME first spiked and then fell you saw lots of people trying to encourage everyone to hold. What this ignored is that someone would be left holdi…

> Having landlords is fine as long as those landlords themselves are residents of the same city.

I suspect this would simply lead to property owners having a nominal “registered agent” in the city as the “owner” but all control and profit flows to the real owners.

Moreover, think about blighted cities. If a company is willing to come in to such a city and build some really nice affordable apartments that would improve the city for everyone, it seems like an undue burden to force them to live in that city as well. Your proposal could lead to shitty places to live staying shitty for a long time.

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

#307

Post by VBprogrammer » Tue, Nov 02, 2021, 5:25 PM UTC

mediaman wrote: post #283

BuckRogers wrote: post #272

Earlier quoted context omitted.

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

A note on the mortgage: I understand your aversion to debt, but choosing a shorter duration mortgage can increase the probability of default, even if it shortens the time to the point that you are debt free, because for any given amount of cash reserves you have it shortens the runway you have if you lose your income. As long as mortgage money is cheap, the most profitable course of action is to use the 30 year mortg…

Compound interest means that you will be paying a lot more money for the same house if you buy over 30 rather than 15 years.

However, for someone disciplined, taking a 30 year mortgage and paying it off like a 15 year mortgage with significant over payments is a good strategy. It means if you need to tighten your belt you can always drop down to the normal payment for a spell without so much as having to speak to the bank.

The worst option is to take the 30 year mortgage and then buy the larger house that the longer period allows you to afford.

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

#308

Post by pempem » Tue, Nov 02, 2021, 5:25 PM UTC

dboreham wrote: post #301

BuckRogers wrote: post #272

Earlier quoted context omitted.

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

Just a note to say that the term for a mortgage in the USA is really up to the borrower. This is because you are permitted to pay back more than the specified loan repayment, any time you like. So you can make a 30-year loan into a 20 year loan if you want, or any term shorter than 30 years. The main benefit to a 15-year loan is that it (usually) has a lower interest rate than the equivalent 30-year loan.

There is often a penalty for balloon payments. Please do check that out.

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

#309

Post by mullingitover » Tue, Nov 02, 2021, 5:26 PM UTC

BuckRogers wrote: post #272

game_the0ry wrote: post #255

Former real estate finance professional, here. If you were hoping this was a sign of the real estate market falling and perhaps its your chance to get a bargain, think again. > The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Institutional investors (Blackstone, Blackrock, Colony, et al) will be being in bulk,…

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

> 4) Rates going up to counter inflation. I want this one since I have cash and don't care if rates are 2% or 20%.

You're likely making a bad bet by holding on to cash. The inflation and low rates are doing their job for the most part by driving investment and spending, and you're swimming against the current by doing exactly what you're not supposed to be doing: hoarding cash.

> 5) Vaccine mandate job losses. Supply.

We're already back to full employment. These threats of en masse departures haven't really materialized, the few who haven't caved are just helping newer employment market entrants by offering up some nice safe jobs.

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

#310

Post by PaulDavisThe1st » Tue, Nov 02, 2021, 5:26 PM UTC

cudgy wrote: post #215

drnonsense42 wrote: post #127

Earlier quoted context omitted.

Real estate speculation has likely been around for thousands of years; it’s certainly not new. But, do you see any difference between A. individuals in the mid-2000s speculating on real estate based on individual whims and taking out mortgages they should not and B. large corporations with access to massive datasets previously unavailable, teams of PhDs trained to work on this, equipped with game-changing modeling ca…

Scenario B and A are more similar than you acknowledge. Both are fueled by low cost capital driving prices to unsustainable levels. Scenario B will be a problem too if/when interest rates rise and companies have insufficient cash flow from rents to pay the new debt service. In fact, scenario B may result in a deeper crash, since selling will be swift and by many actors at the same time since they are using similar va…

> companies have insufficient cash flow from rents to pay the new debt service.

If they are pouring their own capital into purchases, why would there be any debt? Are the entities (companies) in scenario B actually borrowing money?