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How Zillow's homebuying scheme lost $881M

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

#431

Post by dionidium »

Retric wrote: post #426
dionidium wrote: post #373

Earlier quoted context omitted.

The problem here is that there are something like 3.5 million housing units in New York City and Billionaires' Row is like 5 buildings. It just simply doesn't matter if every single one of those units is empty. We're not talking about enough units to matter.

Billionaires row is hardly the only home sitting empty as an investment. Further they represent an outsized share of housing space even if the total number of apartments isn’t that high. So even if 5 buildings out of 300 skyscrapers are at 50% occupancy on their own don’t matter much they still impact the market when combined with similar investments. Worse they prime the bubble by convincing more people to invest wi…

There's no evidence for this claim. It's a popular thing to say, so I think it must feel true for a lot of people, but there's no evidence for it and simple arithmetic suggests that it's a red herring. The fact is that vacancies in NYC are historically very low and reached new all-time lows in Manhattan at the end of last year.

People love the "investors and billionaires are buying up the market" story because it suggests a convenient villain, when the truth is that the millions of ordinary Americans who oppose new housing in their neighborhoods are a much bigger factor. Of course, that's not as satisfying as blaming a Disney villain.

We've been under-building for decades. We have a massive shortfall of new units, far beyond the number of empty luxury apartments. Frankly, at this point I'd support a meaningless vacancy tax just so we could put this objection to bed and focus on things that matter.

https://www.cnbc.com/2021/12/09/new-york-city-rents-jump-22p...

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

#432

Post by thaumasiotes »

cma wrote: post #308
paxys wrote: post #221

Earlier quoted context omitted.

Thing is if people start hoarding medicine then new companies can pop up and fill in the gap, or existing ones can increase production, making the whole thing pointless to do. Same goes for every other "necessary to life" product. Temporary disruptions will be handled by the market in the long term, and in the worst case government can step in and regulate. Housing is probably the only sector where all the laws and r…

> Housing is probably the only sector where all the laws and regulations work the other way – to actively stop you from building more of something that everyone needs. The patent system does this in medicine.

The patent system does that everywhere. That's its purpose. The FDA does it in medicine.

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

#433

Post by onlyrealcuzzo »

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…

> Honest to God, the founders of Airbnb should have been sent to prison.

This isn't how the legal system works.

If something is illegal, and you do it, it doesn't mean you always go to jail.

If something is illegal, and you finance other people doing it, it almost always mean you get a fine.

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

#434

Post by onlyrealcuzzo »

lordnacho wrote: post #49
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,…

This has perplexed me as well. Here in the UK, the top 1% of incomes is £175K. Assuming the bank lets you borrow 5x, and you're married to someone with a more middling income, you can borrow ~£1M. Yet there's a ring around London where it's hard to see any family homes that are under £1M. I mean sure maybe they're sitting on equity or mom and dad are contributing, but by my estimation there are a huge number of peopl…

> We'll see how they fare if rates rise.

They'll be fine. If asset prices go down, rates will go down.

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

#435

Post by DonHopkins »

syspec wrote: post #132
brk wrote: post #4

Earlier quoted context omitted.

Mine is pretty accurate ($2.5M), based on recent sales and a couple of solicitations from realtor friends. FWIW, we have had a high frequency of home sales in the past year, so that might help. I just looked up my previous house (sold 5 years ago), and Zillow is saying $740K, which I am pretty sure is massively overvalued, however the street it is on, and general area, have a fairly low turnover, so less recent data.

Humble brag

I'm working on my second million!

...I gave up on my first.

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

#436

Post by thaumasiotes »

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…

> 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".

Renters vote. Prospective renters don't vote, because they don't live there.

Landlords vote too, but there aren't enough of them to counteract the renters.

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

#437

Post by tomp »

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.

I read this more as an indication that "liberal" philosophy is at best hypocritical (liberals "want things" (e.g. free education/housing) as long as they don't have to pay/work for it themselves) and at best contradictory (e.g. "open borders" while at the same time "social security").

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

#438

Post by bgentry »

devmunchies wrote: post #82

> Zillow’s exit from the market strengthens the position of companies like Opendoor or Offerpad, which do something similar Does Opendoor just have better algorithms/models? What factors allow them to have different outcomes from Zillow?

Yes. Source: I was employee 24 at Opendoor. Zillow's pricing algorithms are and always were terrible.

They tried to paper over this during their iBuying push with humans, and then in an effort to outgrow Opendoor, they incentivized growing at any cost without the proper controls to prevent adverse selection. And due to some unfortunate timing with the market cooling, they got wrecked for it.

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

#439

Post by tmp_anon_22 »

pj_mukh wrote: post #427
3np wrote: post #401

Earlier quoted context omitted.

This is missing the point that land is a finite resource and homes aren't fungible. It doesn't help most Californians that more homes can be built in rural Arkansas.

Land is a finite resource but housing units are not. Once America gets over it’s love affair with single family homes, we could undercut most speculators by just building up.

Single Family homes have the benefit of more autonomy where as building up means you're living on-top of your neighbor, its not binary but we should acknowledge the clear QoL tradeoffs of condensed living.

Maybe its inevitable and necessary to force more people into condensed housing, maybe the societal benefits really outweigh the tradeoffs.

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

#440

Post by Retric »

dionidium wrote: post #431
Retric wrote: post #426

Earlier quoted context omitted.

Billionaires row is hardly the only home sitting empty as an investment. Further they represent an outsized share of housing space even if the total number of apartments isn’t that high. So even if 5 buildings out of 300 skyscrapers are at 50% occupancy on their own don’t matter much they still impact the market when combined with similar investments. Worse they prime the bubble by convincing more people to invest wi…

There's no evidence for this claim. It's a popular thing to say, so I think it must feel true for a lot of people, but there's no evidence for it and simple arithmetic suggests that it's a red herring. The fact is that vacancies in NYC are historically very low and reached new all-time lows in Manhattan at the end of last year. People love the "investors and billionaires are buying up the market" story because it sug…

That’s an odd takeaway from an article speaking of a 22+ rent from increase due to COVID bounce-back. Ultra short term trends aren’t particularly relevant compared to long term trends.

One clear the example of the outsized impact is these buildings bought up air rights from multiple properties. So, they reduced the legally available space. When the city makes space for ~100,000 apartments and actually gets less than 1/10th that it’s a problem.

Another is the extreme cost of the associated tax breaks for affordable housing for minimal gain. The city set the tax break based on price while the number of affordable houses was based on the number of apartments. A seemingly obvious problem looking back, but still a problem for city residents.

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