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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

#171

Post by closeparen »

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,…

iBuyers are supposed to be playing a rational strategy over a large portfolio; they pay what they think the house is worth, and unlike an irrational/emotional human who really wants that property for his primary home, they have no reason to participate in bidding wars past what they think the house is worth. The the point of the iBuyer is to turn around and unload it after a few weeks or months on someone who wants it for a primary residence; it's not in their interest to pay more than such a buyer can afford.

People are living longer and tolerating less construction. We're only building or freeing up enough homes in desirable areas to skim the very top of our generation.

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

#173

Post by ipaddr »

pharmakom wrote: post #77
eli wrote: post #56

Earlier quoted context omitted.

What's the top 1% for net worth though?

The problem is it is becoming impossible to be self made. Most people buying real estate in south east of UK and London have middling salaries but substantial help from their parents. The working class kid who made it to 70k/year? Tough luck.

People already made their money in London. Buying a home there means buying into an expensive mature area. Most people buying come from old money or they are over leveraged or foreign sources.

You should try to make some other city into something and buy into their future price increases.

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

#174

Post by mywittyname »

JKCalhoun wrote: post #68
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.

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

"Cash is king" is a common phrase in real estate for good reason. In pretty much all instances, a cash buyer has a leg up over everyone else. In a liquidity crunch, cash buyers get discounts because people can't get loans; in hot markets, they get discounts because they can wave contingencies; in cool markets, they get discounts because they can move faster; etc.

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

#175

Post by ensignavenger »

MiroF wrote: post #136
gnicholas wrote: post #117

Earlier quoted context omitted.

A friend bought a duplex in Berkeley. Due to the tenant-friendly laws there, she will only rent to international university affiliates whose roles/visas will require them to leave after a year or two. Interestingly, she is very YIMBY and liberal, and even has a PhD in urban planning. But no one wants a forever tenant!

You're not a liberal if you're casually violating fair housing law :) Everyone wants to call themselves a liberal or progressive nowadays, it's bizarre. These things are about actions, not self-assigned labels.

Is visa status a protected class for rentals in CA/Berkley?

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

#176

Post by [deleted] »

registeredcorn wrote: post #144
Teknoman117 wrote: post #71

Earlier quoted context omitted.

> 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. This is one of those things that really just confuses me. It's like no one could agree on happy medium between "landlord can eject you whenever they want for whatever reason" and "no one can make you leave, ever, for any reason". And to whoever downvoted yo…

>landlord can eject you whenever they want for whatever reason I don't understand. Why aren't landlords able to do this? Isn't it seen as immoral to steal property from an owner?

[deleted]

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

#177

Post by cuteboy19 »

999900000999 wrote: post #167
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,…

Honest to God, the founders of Airbnb should have been sent to prison. That would have fixed much of this, it's point blank illegal to run a bed and breakfast out of your home. Now if you're my buddy, and you want to slide me $200 to crash at my house for a week that's fine, but if you add technology to it, it ends up destroying entire neighborhoods. Ride-sharing is a bit different, since I'd argue the reduction in d…

> That would have fixed much of this, it's point blank illegal to run a bed and breakfast out of your home.

Why? It's your home, you can do anything in it. Why should you need a license to rent out your own home for a few days? Does it physically destroy neighborhoods or just your perception of it? If so, why should anyone care?

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

#178

Post by sometimeshuman »

Teknoman117 wrote: post #71
paxys wrote: post #57

Earlier quoted context omitted.

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…

> 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. This is one of those things that really just confuses me. It's like no one could agree on happy medium between "landlord can eject you whenever they want for whatever reason" and "no one can make you leave, ever, for any reason". And to whoever downvoted yo…

Not arguing, but there are also many people who do not rent their vacant property because they are too rich to be bothered and are content with the capital gain appreciation.

Perhaps there needs to be a higher tax rate for vacant property that is not a primary residence.

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

#179

Post by karpierz »

lubesGordi wrote: post #157
ryandrake wrote: post #123

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 > 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. I think the obvious answer here is that peo…

I'm under the impression that 'cash offer' just means that whoever is buying has already secured their financing. That means there's almost no risk of the deal falling through and the sale can go from contingent to pending immediately. This is better for the buyer because they sell faster. Senior software eng at microsoft can pull this off no problem (no one is buying a house with cash in their bank, not even rich pe…

It means that they aren't using a mortgage to buy it. If there's a mortgage involved, then the offer becomes contingent on the bank's due diligence which can cause the deal to fall through in a variety of ways.

For example: the bank will only loan you money up to the appraised value of the home, which is done after the deal is signed (banks won't send an appraiser to every house you make an offer on). If the appraiser says the house is worth 500K and you bid 800K, you need to find 300K some other way (usually cash) or the deal falls through.

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

#180

Post by [deleted] »

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.

[deleted]
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