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How Zillow's homebuying scheme lost $881M

fullstackeconomics.com

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

#101

Post by coryrc »

aksss wrote: post #74
a1pulley wrote: post #62

Earlier quoted context omitted.

> 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…

Sounds like the logical thing to do is start desiring a different place with sounder housing/zoning policy. Voting with your feet is a thing when you can’t win at the ballot box.

I think this is another large flaw in our voting system, where things are too local (like zoning). You get a small community of rich people in Berkeley block any new housing, and you want to live there but have no influence on the zoning laws.

Japan's zoning is national and doesn't have this problem. Thus Tokyo is far more affordable than San Francisco, Mountain View, etc.

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

#102

Post by zo1 »

dopamean wrote: post #80
jliptzin wrote: post #51

Earlier quoted context omitted.

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.

Is this in the US? I've never heard of this before and am curious to learn more. It sounds like something that is nearly unenforceable.

It doesn't have to be enforceable. But as soon as you do this, any potential hiccup like having to evict tenants or go to court for anything minor, and the state/police find out about your little "unenforceable" violation.

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

#103

Post by ForHackernews »

paxys wrote: post #57
jliptzin wrote: post #51

Earlier quoted context omitted.

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.

Agreed. Heck I know several people who prefer to keep their condos/houses empty rather than rent them out at market rate because of 100% tenant friendly city and state laws. Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. At that point the city is just incentivizing homeowners to contribute to the housing…

The obvious solution is to just expropriate them and turn them into public housing. It's working in Berlin.

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

#104

Post by javert »

colinmhayes wrote: post #100
javert wrote: post #85

Earlier quoted context omitted.

It's because US monetary policy has created an enormous transfer of wealth to the wealthy and out of the general economy. They do this by extending credit at low interest rates with the collective understanding that the value of the dollar will continue to be printed away. The wealthy (like me...) buy stuff on credit now and pay it back later with much cheaper future dollars. COVID threw a wrench in the scheme tempor…

Monetary policy and fiat currency are unequivocally good things. Deflation is what caused the 50 year recession from 1860-1910. Not being able to control inflation leads to mass unemployment.

My comment explains in detail the specific mechanism I'm concerned about in a way that everyone can understand it. Your comment regurgitates something from a textbook that people have on reason to actually trust. I don't have a problem that you disagree with me. I have a problem that it's an argument from authority.

Also, I wonder if you're conceding that the Fed steals from the economy in general and gives to the super wealthy, and simply think that that's a necessary side effect of having a well-functioning economy. It seems like it.

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

#105

Post by runeks »

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,…

> 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.

That’s not how market making works. Market makers don’t consume other peoples’ orders, which is required to push up the asked price or down the bid price.

Market making is effectively (1) observing that the market is currently willing to buy some asset at the price A and sell it at the price B (where A A) and a sell order at price B1 (where B1 < B). Thus the market maker reduces the difference between the buy price and sell price (the “spread”).

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

#107

Post by lotsofpulp »

jjice wrote: post #39

It's such a glaring red flag that one of the largest public resources for getting pricing information on housing is also buying and selling that housing. Come on, this is so glaringly abusable that any teenager could tell you what's wrong.

Can you illustrate the mechanism of abuse? Pricing information on housing is readily available to almost everyone, outside of the couple stated that do not mandate it. Zillow makes it easier, but Redfin and realtor.com and countyoffice.org and other websites offer the same information scraped from municipal websites.

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

#108

Post by mirntyfirty »

kevin_thibedeau wrote: post #87
thebean11 wrote: post #66

Earlier quoted context omitted.

> 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.

New afordable housing isn't built. Everything is "luxury" so that developers can maximize profit. When someone tries to build affordable duplexes the NIMBYs say not in my town.

I think many things are intentionally mislabeled as “luxury”. One can buy a simple refrigerator from Best Buy and claim that it’s stainless. I’ve seen listings brag about how the place has a Nest thermostat.

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

#109

Post by asdff »

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,…

I would imagine if your algorithm was anything but the most simplest it could check for this. Having some check like "What is the median income among the workforce" and to not bid above a certain amount relative to that will help prevent overbidding on a house that no one in the area can realistically afford, short of bots.
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