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Zillow lost money because they weren't willing to lose money

stevenbuccini.com

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Re: Zillow lost money because they weren't willing to lose money

#291

Post by vasilipupkin »

“You cannot bootstrap off an existing dataset. Full stop. These datasets can contain implicit assumptions or associations that you are not aware of. This is the original sin of many a algorithmic risk underwriting startup”

False. You can definitely bootstrap and adjust the model as you either gather more data yourself or get more outside data. You can also build confidence intervals around the model predictions and decide how you want to proceed based on that. There is lots you can do with that initial model.

Re: Zillow lost money because they weren't willing to lose money

#292

Post by gregd »

lisper wrote: post #186
ricardobayes wrote: post #149

Earlier quoted context omitted.

anectodal evidence, but yes, an apartment I lived in was 30k cheaper than everything in the house, and the estimate. So I was really happy to have caught a bargain. Then after moving in it turned out the neighbors were unbearable. The father had developed a DIY habit during covid and he would regularly put together furniture at 11PM. Then they had two monsters for kids. Would literally jump around uncontrollably for…

You could sue your seller for failure to disclose.

You indeed can if there are nuisance neighbors and I believe that is considered a material fact in most states. However, most documents, I believe contain a Real Estate Transfer Disclosure Statement which would have had a line indicating a "yes" if there were nuisance neighbors and it would have been up to you to ask for more details.

Re: Zillow lost money because they weren't willing to lose money

#293

Post by rsj_hn »

asdff wrote: post #260
rsj_hn wrote: post #226

Earlier quoted context omitted.

Vacant housing is only a problem in constrained areas. The vast majority of the U.S. is not constrained. Your summer cabin in Montana isn't depriving anyone of a home, because it isn't driving up prices. Your unoccupied condo in Manhattan is depriving someone of a home, but I suspect that there are not so many of these.

When they did the vacancy tax in Vancouver it only affected a couple hundred properties out of like two hundred thousand in the market.

Yeah, when most people talk about vacant homes, they don't understand that almost all of those homes are just between tenants. They are not actually being left vacant.

Re: Zillow lost money because they weren't willing to lose money

#294

Post by a-dub »

"data is fungible?" i think the author does not understand what fungibility means. if something is fungible, that means that any unit of it is exactly the same as any other unit of it. fungible data would be random data, which wouldn't help you predict or model anything.

i think zillow also did not understand what fungibility means. real estate is not fungible. in fact, it's anti-fungible- that's why there are huge diligence processes that exist around most real estate transactions. maybe floors in an office building may be fungible, but residences are definitely not- with all their quirks, customizations and problems.

this whole argument that they failed because the ceo of zillow didn't have big balls is pretty putrid. pair this with the word salad of misused words and twisting of quotes and i'd say this is probably one of the worst pieces i've ever seen posted here. i feel worse for having given it any time at all.

the simple fact is that the ceo of zillow didn't know what they were doing, had a team that (supposedly) applied facebook's infrastructure scaling prediction library to house prices and then attempted to apply a market making mindset to the real estate market at scale. not only is this probably something nobody should try to do, considering we contribute so much in tax dollars to first time homebuying incentives as it's recognized that the housing market is where j q public can start to build wealth, it's also probably something that nobody could do (well, at scale, with machines) given that housing is not fungible.

sure, financial instruments are fungible, maybe even late model cars, but definitely not houses. doesn't take a scientist to spot that.

Re: Zillow lost money because they weren't willing to lose money

#295

Post by dsizzle »

rossdavidh wrote: post #273
dsizzle wrote: post #254

Earlier quoted context omitted.

Do you have a reference for this? Is part of the rumor that not everyone in the organization knew this was happening?

No, the rumor was just that they put their thumb on the scale. https://ryxcommar.com/2021/11/06/zillow-prophet-time-series-... "Speaking of middle managers, word on the street is that Zillow Offers put their thumb on the scale of the algorithm to make it engage in more aggressive trades. Manually adjusting an algorithm isn’t necessarily a bad thing, but you need to do it for the right reasons. And clearly that didn’t…

Ah, I was trying to find that article earlier today. (I searched "Sean Spicer data science Twitter" to no avail, ha.)

Actually that piece also hints at an uneven understanding of these issues across the organization:

> In one tweet, I semi-joked that what happened was lower and mid level employees convinced upper management that the algorithm was 99% accurate by hiding the caveats of what “99% accuracy” means.

Re: Zillow lost money because they weren't willing to lose money

#296

Post by ok123456 »

This is the same folly as Long Term Capital Management.

You're not going to be able to reliably model asset prices at the resolution and accuracy needed to front run the market for a long period of time. This case was worse because the "Zestimate" directly created a feedback loop that moved the underlying asset prices higher.

Re: Zillow lost money because they weren't willing to lose money

#297

Post by sam0x17 »

Let's not forget there was also a huge public outcry on HN and in other places when it came out that they were buying and selling real estate. So if it was socially detrimental to the company's image, and they didn't have the corporate will to collect enough data for it to become profitable, it's a no-brainer that they would get rid of it.

I see this as a victory for us calling out companies for immoral behavior.

Re: Zillow lost money because they weren't willing to lose money

#298

Post by nebula8804 »

goldenkey wrote: post #185
seanmcdirmid wrote: post #170

Earlier quoted context omitted.

So Texas funds education at the state level via property taxes? That sounds surprisingly progressive of them. Washington state does something similar, though it’s more of a subsidy. Education is still mainly funded locally, but the state kicks in with its own funding for poorer districts, so Seattle property taxes subsidize schools across the state in Spokane.

You'd be surprised at how progressive southern states are. The Texas state motto is literally "Friendship." Now, I don't know much about Texas but I did live in Arizona for a few years. It surprised me more than a bit, as someone who grew up in New York. Arizona legalized medical marijuana quite early, followed by recreational marijuana. Their medicaid program AHCCCS [1] is extremely comprehensive and even pays for U…

How is the diversity? Is there integration or do different ethnic groups just keep to themselves. Is there upward mobility for some groups but not others?

What about issues like Joe Arpaio and his policies affecting the community. I can't speak for your experience but I wonder are you really seeing the whole picture?

How do you feel Arizona will cope with the coming climate change? At the rate its going Arizona may become unsafe to live in in 10-15 years.

Re: Zillow lost money because they weren't willing to lose money

#299

Post by nebula8804 »

seanmcdirmid wrote: post #233
goldenkey wrote: post #185

Earlier quoted context omitted.

You'd be surprised at how progressive southern states are. The Texas state motto is literally "Friendship." Now, I don't know much about Texas but I did live in Arizona for a few years. It surprised me more than a bit, as someone who grew up in New York. Arizona legalized medical marijuana quite early, followed by recreational marijuana. Their medicaid program AHCCCS [1] is extremely comprehensive and even pays for U…

> Cactuses are protected from destruction by law, and must be transplanted when doing clearing for construction. You may find the idea of being able to own a firearm without a license to be unpalatable but the state largely remains very safe crime-wise (perhaps due to that?) My mom lived in Tucson and decided on a visit that I might want to go shooting with her and her boyfriend at the time. Suffice it to say, it did…

>When I was a kid, I took a greyhound bus from Vicksburg MS to Seattle WA via the southwest approach (I later did the northwest route, which wasn't as interesting). People would get on the bus from various prisons in Texas (the bus stopped a lot at prisons), New Mexico and Arizona...and were all going to LA. Why bother being homeless in Phoenix (when summers can kill) if LA isn't that far away? Heck, that applies to Texas as well, not just Arizona.

You know I wonder if anyone has done a study on how much of the homeless in LA are from out of state. Is it even possible? There is like 65k+ homeless just in LA country. I don't know how they are going to fix this.

Re: Zillow lost money because they weren't willing to lose money

#300

Post by emodendroket »

opportune wrote: post #158
skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

I don’t think it’s just that they had a poor model, but the combination of that and adverse selection. If you pledge to purchase at the Zestimate then people who reasonably think they can get more than the Zestimate on the open market don’t have an incentive to sell their house to Zillow (besides convenience). But people who think the Zestimate is an over estimate will of course sell to Zillow. So instead of a normal…

Well, that makes sense, but wouldn't it sink Opendoor too then? They are doing fine, as far as I know.
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