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

#341

Post by munificent » Tue, Nov 02, 2021, 5:49 PM UTC

humanistbot wrote: post #198

xyzelement wrote: post #87

Earlier quoted context omitted.

> In less than 3 years the rent in our working class city went up 45%. I sympathize with that but I want to make sure people understand the dynamics. Prices are driven by supply and demand. If there's only one empty apartment in the city and you're willing to pay $2000/month, I am gonna have to pay $2100 month if I want to live there instead of you. That's sort of separate (though related to) prices of houses. What w…

You're omitting a major component of the demand side: investors and speculators. If the market was just made up of the people who are looking to live in those homes, the market would be reasonable for those people. But we have a massive amount of investment funds looking for returns in an uncertain market, plus near zero interest rates for the near future. The number of investors who are buying houses they have no in…

Good point.

One way to look at this is that a house on a piece of property can be treated as a fungible product for two different markets: it can be an investment vehicle for investors, or a place to live for homeowners.

As its value to one of those markets increases, buyers on that side suck supply out of the other market. You can get a sense of how much this is happening by looking at the vacancy rate: higher vacancy rates implies that houses are worth relatively more to investors than homeowners.

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

#342

Post by HarryHirsch » Tue, Nov 02, 2021, 5:49 PM UTC

PaulDavisThe1st wrote: post #318

HarryHirsch wrote: post #293

Earlier quoted context omitted.

The price for housing has gone up substantially in the last 20 years, housing takes up a greater share of peoples incomes than it did in the past, and there is no reason for it. We wouldn't tolerate the price of food going up by the same percentage.

We tolerate it in housing because the asset appreciates. If food costs went up substantially, but you could eat the food and then resell it for more than you paid for it (and sometimes a lot more than just inflation-linked increases), I suspect we'd tolerate that too.

Now we are getting somewhere. The owner class tolerates housing price increases because they think they are getting a good deal (but it's just inflation, if the price of necessary goods goes up, that's inflation), and the renter class gets fleeced. It's not a recipe for long-term stability when 2/3 of the population band together to oppress the remaining 1/3, all this with government support.

It's also concerning that housing is a government-supported investment, it's an unproductive asset. That's not how you encourage progress and development. Even if you just have a field you can grow crops but no such luck with housing.

(Maybe there's change on the horizon, a collegue who lives somewhere in the Rust Belt complained that her 25-year old daughter can't move out. She has a regular job, but the rents have become so high that she cannot afford an apartment on her salary. So there's hope that civil unrest will be averted.)

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

#343

Post by qorrect » Tue, Nov 02, 2021, 5:49 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…

> Ultimately these things always revert to mean.

Yeah, until they don't...

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

#344

Post by qorrect » Tue, Nov 02, 2021, 5:52 PM UTC

freeflight wrote: post #276

gmadsen wrote: post #176

Earlier quoted context omitted.

This is radically different than the 2000s bubble. also GME is over $200 currently, when it was $10 a year ago

> also GME is over $200 currently, when it was $10 a year ago And they got there by running a sustainable and profitable business? No, they got there because Reddit decided to play their own little game of pump&dump. Which is yet another blatant example of how decoupled the stock market is from the actual real world economy.

> little game of pump&dump

Actually the game was buy and hold ( diamond hands ), and only because they saw an enormous amount of shorts outstanding, so much so that a squeeze was all but guaranteed.

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

#345

Post by munk-a » Tue, Nov 02, 2021, 5:53 PM UTC

ep103 wrote: post #321

the-pigeon wrote: post #296

Earlier quoted context omitted.

This would be easy to fix with legislative that makes property taxes much higher for investment home properties. I don't think I've ever heard of a politician even talking about that though.

They are generally called non-primary residency taxes, and they're definitely a thing, and definitely getting more publicity, and most definitely need to become much stronger and more widespread.

We have these in BC - they were adopted in response to overseas real estate investment (and other factors) driving the Vancouver housing market insane. Canada also has a number of programs that make property purchase for new homeowners more affordable by waving some taxes and allowing interest free borrowing from your retirement fund. So the fight to keep housing affordable for everyone is a difficult one.

One of the issues is that when these sorts of policies initially roll out you tend to see a contradictory effect of sudden spiking in prices as a lot of people who were on the fence suddenly decide to add to the housing market demand - but over time these policies tend to settle in a place where thing are more affordable.

The other issue is that the renewal period for first time home owner benefits is quite long, so if you are exiting a long term relationship or trying to pick yourself up after bankruptcy you can be forced to enter the market as if you were a well established asset holder.

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

#346

Post by munificent » Tue, Nov 02, 2021, 5:53 PM UTC

johnnyApplePRNG wrote: post #24

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

Imagine you are a top executive at said real estate company and are trying to decide what to do:

1. Invest heavily in real estate, prices keep going up, company gets rich, you get a huge bonus and buy a yacht bigger than Cleveland.

2. Invest heavily in real estate, prices drop, company stock plummets, you're still rich and still have your football-field-sized yacht.

3. Don't invest heavily in real estate, prices keep going up, company misses out, you're still rich and still have your football-field-sized yacht.

4. Don't invest heavily in real estate, prices drop, company doesn't get hurt, you're still rich and still have your football-field-sized yacht.

There's one clearly winning strategy.

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

#347

Post by munificent » Tue, Nov 02, 2021, 5:54 PM UTC

tibiahurried wrote: post #220

Homes like stocks are way overvalued. Homes are fueled by the frenzy of ownership at all costs, and stocks keep pumping at absurd levels. Everything is extremely overpriced. Eventually, it will come down to common sense. My friend has put all his savings and stocks to buy a 2b apartment. Myself, on the other hand, did not sell any stock and have invested all my savings. I rent a much bigger place, my rent is way lowe…

> After that, I will retire and move to a cheaper area.

Some people don't treat their social network as fungible and want to grow old next to their friends and family.

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

#348

Post by lordnacho » Tue, Nov 02, 2021, 5:55 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…

I'd say number 2 is a long shot. Political risk is not terribly simple. Eg I worked for a firm that thought the Iraq war would mean oil would rocket and markets crater, didn't go down that way. Point is even if the thing you think will happen happens, the effect is not as obvious as you think. More examples are the monthly NFP figures, you might naively think job losses means economy is doing badly, thus market goes down. But it's rarely that clear.

4 you have to ask yourself about real rates, not nominal rates. Yes you want to get paid interest, but you also have a loss on inflation. Also, you pay tax on nominal but you don't get a credit on inflation.

What you really want to think about is whether rates will get so high that people can't afford to refinance, and are thus forced to sell.

As sad as it sounds, you may want to look into that forced seller thing. When someone hits hard times, it gets even harder due to them having to sell at a loss compared to the market, which for you as a buyer is straight up money in your pocket. See about your local foreclosure markets, I think a lot of them might still be done in an old fashioned show-up-in-real-life and shout way. Depends on where you live.

Finally, it's good to list risks as you do. The big question though, is always whether the market already reflects your thoughts.

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

#349

Post by refurb » Tue, Nov 02, 2021, 5:55 PM UTC

EastOfTruth wrote: post #147

teraflop wrote: post #95

Earlier quoted context omitted.

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...

“Listed”, not sold. Homes typically go for well over listing

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

#350

Post by t-writescode » Tue, Nov 02, 2021, 5:56 PM UTC

nojito wrote: post #300

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,…

>at a steep discount before they even hit the market This isn't really true. They are paying above market rates and have been for the past 18 months or so.

Isn't the easiest way to make market rates higher is to, en masse, over-pay to force everyone into thinking that the house is worth more, Thinking Fast and Slow style?