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How Zillow's homebuying scheme lost $881M

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

#581

Post by game_the0ry »

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,…

> Tangentially related, I talked to a friend who works on geospatial data for one of the big vacation rental companies, and he was remarking how many homes in many desirable areas are now rentals. It's not that uncommon to see nearly entire neighborhoods converted to short term rentals now in some areas where they're still legal. Hearing that really depressed me.

Adding to your data points: this is happening in some CA beach communities. Many beachfront homes in Huntington Beach and Newport Beach have been turned into AirBnBs that seem to cater to social media influencers desperate for instagram-able pics.

Some more anecdotal data: I know a couple of people who are professional AirBnB hosts and they're constantly in the market buying real estate to turn them into rentals. They buy cash in the cities I mentioned above, as well as San Diego, Las Vegas, Los Angeles, NYC, Brooklyn, Nashville, Austin, and others. This is a lucrative business, at least for the time being.

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

#583

Post by shp0ngle »

skrtskrt wrote: post #282

Some twitter threads from Zillow insiders I saw around this referenced a couple things: * the pricing algorithm was good, but the business leadership got hungry and kept overriding it with higher offers in the hunger to do more business. * they were trying to do so much business that they couldn't source the labor need to flip - painting, landscaping etc. They were so backlogged they were just sitting on houses they…

Ahh the classic “lose at every sale and make it up in volume” strategy

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

#584

Post by ChuckNorris89 »

seattle_spring wrote: post #580
BucketsMcG wrote: post #567

Earlier quoted context omitted.

As far as I'm concerned the quality-of-life tradeoff heavily favours higher-density housing. I live in an apartment block and so does everybody else for miles around. Our building, like almost every other around here, tops out at seven storeys. It's very solidly constructed, so there's little to no noise from neighbours, not that they make much noise to begin with as they're a pretty considerate bunch. The downside t…

> It's very solidly constructed, so there's little to no noise from neighbours, not that they make much noise to begin with as they're a pretty considerate bunch. Neither of these things have been even remotely true in any apartment I've lived in the US, even ones billed "luxury". It's always been thin-walled garbage where I can hear every word of every conversation of my neighbors, who have typically felt that liste…

>It's always been thin-walled garbage where I can hear every word of every conversation of my neighbors

I feel this is mostly a US problem.

In most of Europe, apartment blocks are solidly built, especially the older ones, even in Eastern Europe.

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

#585

Post by shp0ngle »

projektfu wrote: post #205

The author buried the lede. Zillow came up with a model to choose bid and ask prices. The model said, "Don't buy". They didn't believe the model and chased the deal, and lost money. Sometimes it's better to sit on your hands.

Yeah this article makes it sounds like algorithmic trading is wrong by design, but that’s not really true in this case at least

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

#586

Post by lelanthran »

registeredcorn wrote: post #166
MiroF wrote: post #149

Earlier quoted context omitted.

> Why aren't landlords able to do this? Isn't it seen as immoral to steal property from an owner? Well, for one, the government should enforce contract neutrally - so if you sign a contract leasing your property, you can't unilaterally break this without cause. Second, we as a society have an interest in giving people time to move their stuff out and find a new place to live.

Thanks for the response! Honestly, I was going to delete my comment, I felt like I was asking in bad faith, but can't since it had a reply. I guess I see your point. I tend to side a bit harder with the landlords, but I don't want people tossed out on the streets without any sort of warning either.

> I tend to side a bit harder with the landlords, but I don't want people tossed out on the streets without any sort of warning either.

I expect that that hardly ever happens. Landlords aren't in the business to make life unnecessarily bad for renters, they're there to make money.

A tenant who stayed in the same place for 3 years, always pays on time and never damages the property is preferably to an unknown. Landlords know that starting an eviction can cost them up to a year of income, plus there is always the risk that the new tenant is going to be even costlier.

Why on earth would a landlord roll the dice on someone new? My guess is that many of those sob stories you are hearing from tenants are their side of the story.

They aren't going to tell you that the miss rent sometimes (and they'd have to miss a lot of months before a landlord will start the eviction process).

They aren't going to tell you that the landlord had to make substantial repairs to damages that they caused.

They aren't going to tell you that they sublet to "their cousins", and have 4 people to a room in a 3 room house.

When you listen to a landlord's side of the eviction story, it always comes down to money: "that house is my income and I wasn't getting it anymore".

No landlord is cutting off their income stream for several months just because they want to throw tenants onto the street.

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

#588

Post by thr0wawayf00 »

screenbreakout wrote: post #559
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,…

But in a way if the rental prices were to stay reasonable (say it was a non profit running the schtick) isn't a great way for as many people as possible to share a limited ressource? Maybe property is like golden handcuffs, nice but locks you down...again it's more a western thing as we in the east tend to buy cash down... Though I would like to see some company buying out the inner city ground floor space of some of…

> But in a way if the rental prices were to stay reasonable

There's zero evidence to believe that this will be the case. I will never trust large multi-family property management companies driven by software to consider keeping rental rates reasonable. That's antithetical to our capitalist system, profit is the one and only goal.

> Maybe property is like golden handcuffs, nice but locks you down...

In terms of utilizing the space, sure. However, buying property has been the primary method of wealth accumulation for most of the country going back the last several decades. Property ownership is also one of the best ways to protect yourself against inflation, which we're all getting serious exposure to. And with the speed at which houses are moving in this market (listings stay up 2-3 days in my area for the most part), property owners aren't very locked down either.

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

#589

Post by endisneigh »

sobkas wrote: post #565
endisneigh wrote: post #420

Earlier quoted context omitted.

If you honestly believe being a landlord is such a slam dunk you should take out a mortgage, buy a property somewhere in United States (there are places as cheap as $50K) and rake in the cash. There are landlords who absolutely take care of all of the maintenance - and of course there are landlords who are absentee landlords as well. To say a landlord inherently doesn't do anything is the most ridiculous thing I've r…

> If you honestly believe being a landlord is such a slam dunk you should take out a mortgage, buy a property somewhere in United States (there are places as cheap as $50K) and rake in the cash. I'm sorry, but I am not sociopathic enough to profit from other people misfortune (not being able to to buy a roof over their heads). Not everything is about making as much money as you can squeeze from other people.

You don’t personally need to be. If it’s free money why hasn’t someone done it? Why are there houses sitting there vacant?

I also disagree with the silly assertion that landlords are sociopaths would you rather people be homeless? If someone is unable to afford to buy a house what should they do?

Also - are business owners sociopaths? Doctors? Farmers? Medical device makers?

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