Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

Post by trident5000 » Tue, Nov 02, 2021, 11:47 PM UTC

derefr wrote: post #92

qqqwerty wrote: post #72

Earlier quoted context omitted.

This is an interesting lesson in algo trading run wild. Roughly, house prices have a fundamental ceiling, and it is determined by the size of the monthly payment that banks will allow the typical homebuyer to assume when approving a loan. If Zillow was the only iBuyer in a particular market, then that ceiling would likely have held, as all other non-zillow sales would still be operating under the loan approval constr…

> house prices have a fundamental ceiling, and it is determined by the size of the monthly payment that banks will allow the typical homebuyer to assume when approving a loan. In the more irrationally-hot markets, why assume that housing is even being purchased on a mortgage by your average home-buyer, rather than being purchased cash-in-hand by a private or corporate investor looking to park wealth they've already g…

Post by emodendroket » Tue, Nov 02, 2021, 11:49 PM UTC

Post by not2b » Tue, Nov 02, 2021, 11:49 PM UTC

gibsonf1 wrote: post #119

muttantt wrote: post #11

Crazy. I recently sold a condo to Opendoor for significantly more than I would have even thought to list it for. When I negotiated with Opendoor after their initial offer, I pointed out a recently sold condo (days before, in similar condition, layout and finishes) in the same complex that sold for much higher than Opendoor offered. Within hours Opendoor came back matching that same selling price. The kicker? It was a…

That doesn't sound like an algorithm mistake, just like a policy to match sales nearby at the same price because of the assumption that prices will just keep going up coupled with the stupidity of not tracking what you've bought so far - yikes! Oh, on second thought, I guess it could be algo as that previously bought nearby condo could have been priced using some crazy algorithm.

Post by naniwaduni » Tue, Nov 02, 2021, 11:53 PM UTC

derefr wrote: post #92

qqqwerty wrote: post #72

Earlier quoted context omitted.

This is an interesting lesson in algo trading run wild. Roughly, house prices have a fundamental ceiling, and it is determined by the size of the monthly payment that banks will allow the typical homebuyer to assume when approving a loan. If Zillow was the only iBuyer in a particular market, then that ceiling would likely have held, as all other non-zillow sales would still be operating under the loan approval constr…

> house prices have a fundamental ceiling, and it is determined by the size of the monthly payment that banks will allow the typical homebuyer to assume when approving a loan. In the more irrationally-hot markets, why assume that housing is even being purchased on a mortgage by your average home-buyer, rather than being purchased cash-in-hand by a private or corporate investor looking to park wealth they've already g…

Post by emodendroket » Tue, Nov 02, 2021, 11:56 PM UTC

klyrs wrote: post #112

woeirua wrote: post #7

This is kind of a big deal in the real estate sector. The only reason that Zillow would sell everything right now is if they believed that the carrying costs of the properties until they (eventually) sell would eat all of their profits. They must be seeing flashing red signs across the board that there's a slowdown in the market and that scenario is exactly what will play out if they don't exit quickly. There's no wa…

The fact that they're also laying off a quarter of their staff looks significant, to me. They can't afford to hold these properties and keep the lights on. It's a lot like Uber -- in addition to the ordinary expenses of a real estate holding firm, they've also got a website to run, and that's stupid expensive because it seems like the industry still hasn't learned from the first .com bubble.