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

#401

Post by bink » Tue, Nov 02, 2021, 6:38 PM UTC

lordnacho wrote: post #348

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…

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…

2 is not only a long shot but it's also not like if there were a third world war there would be some asset classes that escaped unscathed. If China went to war and that somehow crashed real estate prices, it's not like stocks would be soaring.

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

#402

Post by wallacoloo » Tue, Nov 02, 2021, 6:39 PM UTC

wonderwonder wrote: post #266

ItsMonkk wrote: post #180

Earlier quoted context omitted.

Restrictive zoning is a consequence of scarcity seeking incentives. Housing can't be both Affordable and a good Investment. Therefore the only proper value for a home is the price that it costs to build it. The way to do that is a 100% Land Value Tax.

Maybe I dont understand (which I am open too) but it does not seem to make sense unless we transition to a centrally managed economy. Supply and demand drive the price of housing. Whether a house is purchased as an investment or not, it will appreciate based on a variety of factors, including quality of schools, proximity to jobs, etc. If the price of housing did not fluctuate based on demand, and everyone could affo…

I think the way this looks in GP’s proposal is “he who can afford to pay the most rent (taxes) gets the home”, which is a lot like the current system you describe except the rent (taxes) goes toward funding the city and improving such public goods as the schools and roads you mention, instead of rewarding speculators.

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

#403

Post by VBprogrammer » Tue, Nov 02, 2021, 6:39 PM UTC

grey-area wrote: post #375

VBprogrammer wrote: post #307

Earlier quoted context omitted.

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…

You’re not allowing for leverage, inflation and incredibly low interest rates. In real terms cash is losing significant money every year while assets are gaining money. Debt makes sense as long as you have a margin of safety and can multiply the impact with leverage. IF you believe inflation will be significant over 30 years say, and can lock in a low rate, it is better to go with a longer term.

People use all kinds of accounting tricks to convince themselves that some purchase or other makes financial sense. Trading in their perfectly good 2 year old car for a brand new one, buying on finance when they could buy a cheaper one outright. I'm sceptical that it ever pays off that way.

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

#404

Post by dionidium » Tue, Nov 02, 2021, 6:40 PM UTC

gonehome wrote: post #374

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 framing feels backwards to me - I thought the reason institutional investors see it as a valuable asset is because of NIMBYs constraining supply for them via local policy and obstruction. The institutional investors are a symptom of that policy, but the NIMBYs (and incentives that exist for existing owners like prop13) are the cause. Real Estate scaling supply to meet demand is in direct conflict with old proper…

The investors themselves agree with you. Here's one such company's SEC filing:

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

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

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

#405

Post by djmips » Tue, Nov 02, 2021, 6:40 PM UTC

citilife wrote: post #386

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 bit more optimistic. Only something like 2% of the U.S. is urban. https://www.visualcapitalist.com/america-land-use/ If it became problematic that people didn't own homes, but wanted to, they could easily just open land for building. They may own all the land around cities and all the corporations move there. There by making "corporate cities", but at the end of the day, people can create their own thing like t…

That's way optimistic. There's lots of other reasons to be in cities besides jobs.

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

#406

Post by ajsnigrutin » Tue, Nov 02, 2021, 6:41 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.

I mentioned the idea in another thread... but yeah... 0% property tax on your first property and primary residence, 1% on the second, 2% on the third...

Still makes it possible to own several houses/apartments (eg. summer home), but makes it impossible to do at a scale that those companies do.

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

#407

Post by fish_phrenology » Tue, Nov 02, 2021, 6:42 PM UTC

jdhn wrote: post #81

SN76477 wrote: post #77

I hope this bubble bursts. In less than 3 years the rent in our working class city went up 45%. Not to mention the absurd qualifications one needs to rent. 4 times the income to rent, very good credit and background checks. This is not sustainable for working class people.

>Not to mention the absurd qualifications one needs to rent. This was probably prompted by the Covid rent restrictions. Landlords (especially smaller ones) don't want to rent to someone who can avoid paying rent due to government decrees.

Having rented in Seattle for 6+ years at essentially the lowest non-subsidized price point, these existed before, along with a variety of other problems.

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

#408

Post by tibiahurried » Tue, Nov 02, 2021, 6:43 PM UTC

munificent wrote: post #347

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.

>want to grow old next to their friends and family.

That's exactly what I am gonna do.

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

#409

Post by cheeze » Tue, Nov 02, 2021, 6:43 PM UTC

munificent wrote: post #347

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.

Sometimes buying makes sense as well. The NY Times has a good calculator for this. In my case, rent is so expensive in my city that buying and building equity was higher EV than keeping my cash in investments.

YMMV.

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

#410

Post by PaulDavisThe1st » Tue, Nov 02, 2021, 6:44 PM UTC

brewdad wrote: post #369

PaulDavisThe1st wrote: post #310

Earlier quoted context omitted.

> 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?

Given the current interest rate market, I think it's safe to assume they are borrowing money to purchase homes. They aren't taking out individual mortgages but I would be shocked to learn that they aren't borrowing millions through other forms of financing and then paying "cash" for homes.

I had the impression that this was happening because they had excess cash and nowhere particularly interesting to put it. Why would you borrow if you have cash sitting around and expectations of a good-to-crazy rate of return?