How many homes did they buy? wow.
Oh, ~5,000/month.
How Zillow's homebuying scheme lost $881M
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Re: How Zillow's homebuying scheme lost $881M
#12Zillow's estimates of home values in my area have consistently been 150% of actual prices, as far as I've seen over the past years. Not that I've looked that closely and given that this is a hard area for them with low sales and a broad range of values for reasons not easy for their algorithms to quantify. However, I always took that to be intentional, sort of a "see how valuable your home is / how high the values ar…
It varies widely by Area how accurate the zestimate is. In some places Redfin is much higher than Zillow, in others places it’s reversed. Sometimes they’re too high, sometimes they’re too low. I presume the algorithm does best when the prices are fairly flat, but in this market real estate prices changed dramatically and it seems pretty impossible for an algorithm to figure it out without modeling the entire economy and movement patterns of the population.
Re: How Zillow's homebuying scheme lost $881M
#13Anecdote on the estimates. We bought a house for X and renovated it. The day before we listed it both Zillow and Redfin estimate had an estimate around the purchase price X. When we listed it for 2X, both companies changed their estimate to be close to the listing. However, Redfin changed the entire price history as well showing a gentle slope. Zillow preserved their previous history and showed a spike.
Re: How Zillow's homebuying scheme lost $881M
#14Zillow's estimates of home values in my area have consistently been 150% of actual prices, as far as I've seen over the past years. Not that I've looked that closely and given that this is a hard area for them with low sales and a broad range of values for reasons not easy for their algorithms to quantify. However, I always took that to be intentional, sort of a "see how valuable your home is / how high the values ar…
Another anecdote: I’m in Oakland, where condo prices went down slightly during the pandemic overall, yet Zillow’s estimates are always much higher than Redfin’s (which seem to be in the same ballpark as the sale prices).
maybe Redfin actually incorporates "price at end of closing" into their models, instead of say .. "wishful drinking" prices from Zillow and crew?
Re: How Zillow's homebuying scheme lost $881M
#15I am especially annoyed at Zillow SF holding "Data Science" meetups in San Francisco at the penthouse place, while advertising for TWO data science positions.. meanwhile, frat guys are at the golf course by the dozens, across three states. The people that they hired at that time, probably built this setup exactly as required by the frat guys. Happy banking Zillow!
There's some poetry in older banks claiming they're pivoting to being tech companies (i.e. Capital One) while some tech companies are heading straight towards being banks.
Re: How Zillow's homebuying scheme lost $881M
#16The scary thing is that it's easy to see how something how like this could drive a market boom and bust cycle. I'm imagining a scenario where two iBuyer companies try to outbid each other algorithmically, driving the prices further and further out of reach of people who are looking for a primary home. Tangentially related, I talked to a friend who works on geospatial data for one of the big vacation rental companies,…
The problem here is that they were buying the homes at prices above what they would actually sell for to real buyers and Zillow ended up racking up losses in that way. In your scenario in which two iBuyers outbid each other -- fine, but wouldn't the same situation as Zillow's happen? They'd just end up with overpaid inventory.
Re: How Zillow's homebuying scheme lost $881M
#17How much money did this cost everyone else?
Re: How Zillow's homebuying scheme lost $881M
#18The scary thing is that it's easy to see how something how like this could drive a market boom and bust cycle. I'm imagining a scenario where two iBuyer companies try to outbid each other algorithmically, driving the prices further and further out of reach of people who are looking for a primary home. Tangentially related, I talked to a friend who works on geospatial data for one of the big vacation rental companies,…
I think people should expand what "desirable" means to them. There's a ton of suitable houses all over the country. Everyone seems to need to own a SFH in a trendy part of a trendy city.
Re: How Zillow's homebuying scheme lost $881M
#19Zillow's estimates of home values in my area have consistently been 150% of actual prices, as far as I've seen over the past years. Not that I've looked that closely and given that this is a hard area for them with low sales and a broad range of values for reasons not easy for their algorithms to quantify. However, I always took that to be intentional, sort of a "see how valuable your home is / how high the values ar…
The Zestimate history for a condo I used to own is hilarious. There have been several sales of this property over 5 years, all at about the same price.
If you follow the Zestimate through time, it climbs rapidly until there is a sale, then it goes "oh shit" and plummets down to the sale price, which is barely different from the last time it was sold. This cycle repeats each time the property is sold.
Zillow is absolutely certain that this property should be rapidly increasing in value, no matter how many times it sells at about the same price it sold for last time.
When we sold the property, the agent told us it was in an awkward spot: too expensive for single people, not quite big enough for high-earning families. So it's stuck in price limbo as all the neighboring condos skyrocket.
Based on this experience, I remain convinced that there are micro-structural factors the fancy data science pricing models just can't seem to capture yet.
Re: How Zillow's homebuying scheme lost $881M
#20I recently bought a home. We toured a Zillow home, and I can understand what they were going for and where they failed. We were able to pull up to the driveway, book a tour for that minute, and walk in the front door. It was almost a magical experience compared to the process of finding and going to showings. The listings were clear and thorough. The experience was extremely compelling. The downside: the homes were a…
If I can give any home buying tip from my experience of buying two houses it's been to look at places that are in "the middle". Both homes I've bought in SoCal have had some god-awful photos online, and the finish is new-ish, but done by someone in the 70s so it's new but tacky in a little-old-lady way.
This ends up pricing the house too expensive to flippers, and not nice enough to sell compared to other houses because it doesn't have the farmhouse sink and looks exactly like a grandma took out a home equity line and renovated (which is what happened).