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How Zillow's homebuying scheme lost $881M

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Re: How Zillow's homebuying scheme lost $881M

#61

Post by sokoloff »

alistairSH wrote: post #45
rank0 wrote: post #18

Earlier quoted context omitted.

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.

“All over the country” doesn’t have good jobs, good schools, access to entertainment, etc. But, I agree on the SFH part. The expectation that a 3000sqft house on 1/4 acre is the norm is completely unsustainable. Yet that seems to be what many people want. Even in high COL areas where demand and cost should be driving density.

Of course that's what people want. Because it beats the pants off a 1100 ft^2 condo or apartment with no private yard and shared walls/floors/ceilings in almost every regard of daily, lived experience.

I totally get why people want that; what I don't get is why they can't understand that so many other people also want it that most everyone will have to compromise on some aspect.

Re: How Zillow's homebuying scheme lost $881M

#62

Post by a1pulley »

thr0wawayf00 wrote: post #9

The 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,…

> It's honestly quite scary how I'm in the top 2% of income earners in my generation and yet I could barely afford to buy a small place in a semi-desirable area. I can easily see myself not being able to compete in algorithmically dominated markets flush with venture cash in the future and I earn more than just about everybody I know today.

A thought exercise: suppose that no new houses are ever built and that housing turnover is nearly zero. What happens to the price of housing in that limit? Market forces do not necessarily entitle the top n% of the income distribution to housing.

I was a bit cynical about this too: I live in Los Angeles, where a "small place in semi-desirable area" gets listed for 1.5M and goes for nearly 2M. I'm somewhere in the top 5% of earners in California, but that $2M 1950s tract housing would be >50% of my post-tax income.

Re: How Zillow's homebuying scheme lost $881M

#63

Post by InitialLastName »

rank0 wrote: post #50
t-writescode wrote: post #30

Earlier quoted context omitted.

Not me. I just want mixed residential housing. Yeah, it’s not happening because America made that effectively illegal. We’re finally rolling some of that back, but it’s going to take decades to undo and by that time the shortage will continue.

Sorry man that sucks. I own a property that's effectively a duplex in Atlanta. My buddy owns a duplex in Denver. It's not everywhere that mixed residential homes are banned! Are you in CA?

Normally when people talk about mixed-use development, they are talking about zoning rules that allow residential and commercial use in close proximity, not necessarily about forced single-family use (although that is also an issue in many places).

Re: How Zillow's homebuying scheme lost $881M

#64

Post by pigscantfly »

duck wrote: post #33
haroldp wrote: post #24

Earlier quoted context omitted.

> 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. But iBuyers are always low-balling. They are bidding under the asking price with an all-cash offer that they hope will make up in speed and ease what it lacks in price. > It's not that uncommon to see nearly entire neighborhoo…

Are you saying AirBnB fixed all this? I don't see them renting much in late October nor passing out candy.

No, they're saying the problem existed before AirBnB.

Re: How Zillow's homebuying scheme lost $881M

#65

Post by JRKrause »

Zillow purchased a home in my neighborhood for $370K, is now trying to sell it for $410K. Prior to this purchase other houses with a larger footprint in our exact same neighborhood were selling for $250K(literally just months before). For some reason zillow chose to pay 100K over what would have been fair value for the house.

Re: How Zillow's homebuying scheme lost $881M

#66

Post by thebean11 »

a1pulley wrote: post #62
thr0wawayf00 wrote: post #9

The 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,…

> It's honestly quite scary how I'm in the top 2% of income earners in my generation and yet I could barely afford to buy a small place in a semi-desirable area. I can easily see myself not being able to compete in algorithmically dominated markets flush with venture cash in the future and I earn more than just about everybody I know today. A thought exercise: suppose that no new houses are ever built and that housin…

> suppose that no new houses are ever built

Why would you suppose that? I don't really see what you're getting at, that's a very unintuitive assumption; it shouldn't happen if market forces are allowed to run their course.

Re: How Zillow's homebuying scheme lost $881M

#67

Post by civilized »

jrvarela56 wrote: post #25
rank0 wrote: post #18

Earlier quoted context omitted.

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.

+1 GP is top 2% of their generation but not necessarily top 2% of the area they're looking into. Sounds fairer when put that way.

Yes. The problem is:

1. A lot of high earners want to cram into a small space

2. The existing high earners living in that space don't want to allow more built in that space because they like the neighborhood how it is

So all these high earners compete against each other, and houses become as expensive the winning high-earning bidders can afford.

For this to stop happening, #1 or #2 needs to stop. So, either the high earners need to stop cramming into a small space, or policy must be changed so the locals can't stop the growth of housing supply.

(Usually when I've pointed this out in the past, I get mobbed by NIMBYs who insist that growing the housing supply will somehow cause prices to skyrocket even more. There seems to be a widespread NIMBY belief that standard economics doesn't apply to housing, for mysterious reasons that no one ever quite gets around to explaining. It'll be interesting to see if it happens again today.)

Re: How Zillow's homebuying scheme lost $881M

#68

Post by JKCalhoun »

ourmandave wrote: post #53

I'm planning to sell very soon and love the iBuyer model. Don't have to deal with showings, or fix anything, or hope a buyer's financing doesn't fall through at the last minute. To me that's worth whatever percent they're getting. Sadly, no iBuyer operates in my fly-over state.

Not sure why the article goes to such lengths to legitimize "Corporate flipping", calling it iBuying or whatever.

No matter what terminology you use, buyers without cash-in-hand are getting screwed.

Re: How Zillow's homebuying scheme lost $881M

#69

Post by aksss »

jliptzin wrote: post #51
paxys wrote: post #40

Earlier quoted context omitted.

One can blame Airbnb, Zillow or whoever else, but the truth is that speculation in real estate and vacation towns have both been a thing for a very long time. If the population rises and we refuse to build more houses, the existing ones will get more expensive no matter what. The solution is out there in front of us but everyone prefers to dance around it.

There's even lower hanging fruit than that. I have a 6 bedroom house, but local regulations state that I am not allowed to live with more than 2 people unrelated to me. Plenty of parking, tons of people looking for housing, but legally I am forced to keep 3 bedrooms empty.

I wonder if you could find exemptions for refugees. Seem to be a lot of those lately. Not ignoring the sad irony of this, but if you want to put that space to use there may some allowable loopholes.

Re: How Zillow's homebuying scheme lost $881M

#70

Post by KptMarchewa »

jliptzin wrote: post #51
paxys wrote: post #40

Earlier quoted context omitted.

One can blame Airbnb, Zillow or whoever else, but the truth is that speculation in real estate and vacation towns have both been a thing for a very long time. If the population rises and we refuse to build more houses, the existing ones will get more expensive no matter what. The solution is out there in front of us but everyone prefers to dance around it.

There's even lower hanging fruit than that. I have a 6 bedroom house, but local regulations state that I am not allowed to live with more than 2 people unrelated to me. Plenty of parking, tons of people looking for housing, but legally I am forced to keep 3 bedrooms empty.

>local regulations state that I am not allowed to live with more than 2 people unrelated to me

What? Where is that? It sounds insane and extreme overreach. How can somebody regulate with whom consenting adults choose to live?

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