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

#391

Post by frankfrankfrank » Tue, Nov 02, 2021, 6:31 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,…

I agree. I wish people understood more of what these "institutional investors" are doing. The Fed has essentially trapped us in a system where the likes of blackrock get access to essentially free Fed printing press money right of the rollers that they then use to buy up real assets at inflated prices, which only drives up the inflation that thereby also drives up the value of previous purchases at near zero rate interest.

If you follow that logic to the final conclusion, you will find that these "institutional investors" only have incentive to not only buy up all the assets they can at near zero interest, but that doing so is a kind of self-perpetuating profit machine as inflation creates profits for them.

Yes, this is IMMENSELY dangerous.

Oh, and I did not mention that if it's not in collusion, the Fed has the tiger by the tail and is paralyzed with fear to such a degree that it simply cannot let go so as to at least have a chance of getting away in time, rather than the guaranteed demise of holding on to the tail and then eventually only getting ever more tired and the chance of survival crashing exponentially.

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

#392

Post by vrykoul » Tue, Nov 02, 2021, 6:32 PM UTC

foogazi wrote: post #367

muttantt wrote: post #334

Earlier quoted context omitted.

Not true. I sold a condo to Opendoor recently and it was unlisted, just a private transaction. They overpaid very generously too.

> They overpaid very generously too. How do you know without getting bids from the open market ?

Not op, but a house in my neighborhood was sold to OpenDoor for $397k. It sat unsold for 3 months in an area where other homes are sold over asking on the day that they're listed. They finally have it under contract for $386k for a net loss of $11k.

You can see the transaction history here:

https://www.zillow.com/homedetails/125-Mays-Blf-Fayetteville...

Add in whatever fees go along with the sale, and they're out a fair bit more than that.

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

#393

Post by wayoutthere » Tue, Nov 02, 2021, 6:32 PM UTC

mywittyname wrote: post #49

onion2k wrote: post #25

Earlier quoted context omitted.

Assuming that the additional 128m people need about 50m - 70m new homes it would make sense that there's going to be a boom in supply of homes in the near future. Without the ability to control or limit that growth it could easily result in an oversupply, especially in any given geographic region, which would lead to a contraction in prices. Unless you're also able to predict where these new citizens will live I'd su…

>Unless you're also able to predict where these new citizens will live Larger cities, especially those in warmer regions, is a very good bet.

Climate change will drive a lot of people to the northeast and Midwest in our lifetimes. Much of the Deep South will become unlivably hot and humid, and much of the west will become dry enough that water rationing makes life in the sun not so much fun anymore.

If you want to invest, put your money in places like Pittsburgh and Buffalo. Some values along the coast in Baltimore and Philly too. Plenty of cheap real estate out and I suspect we’ll see a revitalization of the rust belt as climate change makes other areas untenable.

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

#394

Post by shmatt » Tue, Nov 02, 2021, 6:33 PM UTC

lordnacho wrote: post #356

monkmartinez wrote: post #227

Earlier quoted context omitted.

They simply overpaid. My neighbor received an offer of $150k over the z-estimate in Tucson. He felt that it would be stupid not to sell and wasn't even thinking about selling before the offer came in, so he sold. He paid a slight premium to buy his new house out in the boonies, but the gain offset the rise in price. They are currently listing his old house at the zestimate... I doubt they find a buyer even at that pr…

And $150k is how much of the house? Needs some more numbers so we can get an idea of the scale of overpayment. Because if they're just off a few percent, I don't know why Zillow wouldn't just hold on for a bit.

>as of October 27. Out of 224 homes, 208 — or 92.9% — were priced below what Zillow paid.

>36.5% were listed for less than the company first paid for them from the outset.

So these are ZillowBots numbers in Phoenix. They start off with a third going for less than they payed. The rest "hold on for a bit" and slowly the price keeps dropping

Eventually there are so many price drops where 93% of the homes are on the market (so, even now, not even sold) for less than what ZillowBot thought was a good idea

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

so 2/3 of these houses go with the "hold on for a bit" strategy then fail

I don't live there, but from the outside it seems like the Phoenix market is on a downwards trend, and they chose horrible timing, or really bad algorithm coding

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

#395

Post by dionidium » Tue, Nov 02, 2021, 6:33 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,…

I'll be the YIMBY broken record here. These institutional investors are suddenly interested in housing because decades of artificial constraints on new construction have created a situation where prices are rising quickly as demand outpaces supply. Don't believe me? Here's the SEC filing from one such investor:

> We have selected locations with strong demand drivers, high barriers to entry and high rent-growth potential.

Understand that "high barriers to entry" is referring to legal regimes that limit new housing.

Later, they say:

> We have selected markets that we believe will experience strong population, household formation and employment growth and exhibit constrained levels of new home construction.

These companies aren't driving up prices. They're reacting to high prices. That's what's making these markets attractive.

Source: https://www.sec.gov/Archives/edgar/data/1687229/000119312517...

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

#396

Post by shiohime » Tue, Nov 02, 2021, 6:34 PM UTC

cwkoss wrote: post #384

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,…

Every person or corporation that owns more than one residential dwelling should pay increased property taxes based on the number of residential dwellings they own. This is an easy problem to legislate away, our politicians are just too cowardly to decommodify housing.

There are probably easy loopholes to get around your suggestion. Just form another LLC and purchase the property under that LLC instead of you as an individual, then each entity owns only one property, so they get the standard tax rate instead of what you are proposing.

Of course this would be a giant pain of a workaround to scale, but for the non-mega corporations it'd probably work. I'm sure that the huge corporations owning large swaths of residential properties would figure out scaleable loopholes.

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

#397

Post by webinvest » Tue, Nov 02, 2021, 6:34 PM UTC

the-pigeon wrote: post #296

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,…

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.

Yes, they could double or triple the current homestead exemption.

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

#398

Post by r3trohack3r » Tue, Nov 02, 2021, 6:35 PM UTC

valeness wrote: post #126

r3trohack3r wrote: post #46

Earlier quoted context omitted.

I think the ops point is that it will end, not that it has ended.

Yes, but this is not evidence of "it will end" to me.

I think the evidence presented was "history"

> 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 modern history. It's not always like this. It won't always be like this.

I once heard someone who ran an investment floor say, paraphrased: During a bull market, I want my floor staffed with people too young to have lived the last bull market.

They didn't want the risk aversion - drilled into people by the last bust cycle - on their trading floor.

The cycle will repeat itself, folks will go from being unbelievably wealthy to bankrupt overnight (overnight as a figure of speech speaking, the crash will come but might drag out). Folks who bet it all will have their lives ruined. We will have another generation of market participants who are risk averse from hard earned lessons.

The flip side of this is that _everything will go on sale_ for those who had stable investments and those who are income rich.

If everything doesn't go on sale soon (soon might mean many years) it'll be the first time in history we broke out of the boom/bust cycle.

For me, personally, I track my net worth and check in monthly. For the past year I've excluded my home's valuation from my net worth, it's monopoly money; by the time I'm willing to liquidate my house we will be on the other side of a bust cycle. I'm mentally prepared for my home to lose 50% of its value "overnight."

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

#399

Post by wayoutthere » Tue, Nov 02, 2021, 6:37 PM UTC

epistasis wrote: post #132

ClumsyPilot wrote: post #55

Earlier quoted context omitted.

They are gonna need cars and furniture, yet those are not an investment. Is USA running out of land, or Timber, or unemployed people that could be employed to build a house? We need to get institutional 'investment' out if house flipping and fix zoning. https://youtu.be/CCOdQsZa15o

We have run out of "zoned capacity" in the areas that people want to live. Fortunately, this is an infinite resource, and we could flip simple governmental switches to allow more housing, which generates more property tax to grow the infrastructure. However, existing homeowners are a political bloc that mightily resists flipping that switch, both because they don't like to see change, and also because they benefit fi…

Agreed about individual homeowners; which is why the use of homes as an investment vehicle is intimately tied with institutionalized racism and redlining. You could not “invest” in redlined areas as banks would not issue mortgages on those properties. So those houses never appreciated in value the same as houses in non-redlined areas, and the generational wealth created by owning your own home was only available to those homeowners in non-redlined areas.

The history of redlining is incredibly recent (it was in full force well into the 1990s), so it’s not something we can pretend is a historical artifact. Highly recommend The Color of Law for more on this subject, it really opened my eyes on how laws used to encourage homeownership were also used to marginalize black people.

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

#400

Post by dionidium » Tue, Nov 02, 2021, 6:37 PM UTC

the-pigeon wrote: post #296

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,…

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.

Thereby driving up rents.