How on earth did a real estate analytics company lose money buying and selling homes in THIS market?
Possibly because they didn't add themselves into their modelling?
Zillow seeks to sell 7k homes for $2.8B after flipping halt
181–190 of 634 posts
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#182They seem to be flipping the houses fast and hard around my neighborhood. One of my favorite things to do is walk around with the dog and see houses go up for sale. Lately, I noticed houses sold only to be relisted by Zillow like 30 days later at $50k+ the original price. And they actually seem to be able to sell them that high. My house is currently worth 3x what I paid for it back in summer of 2013.
I can't help but feel this is another bubble. I'm paid very well, in a not well paying region. So I'm wondering where all these folks are getting their money from. Even those new Ryan Homes which are cookie cutter and made out of pure vinyl are going for $250K. Maybe my doom-ish outlook is because I'm a millenial so I'm used to everything being bad.
same. even though I make good living, buying house seems difficult - it's a lot of money for many years. add closing costs and misc repairs, and owning appears to be quite expensive. I wouldn't know what to do if at any point within next 10 years I lost the job.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#183Earlier quoted context omitted.
Decades of under-building due to restrictive zoning laws will do that.
Not everywhere is California
Many cheap places have other problems that are reflected in the price of the property (ie. There is a cost to living in a town full of anti-vaxxers/religious nutjobs/etc.)
If you look at California exodus data, its mainly people making less than 100K, population is increasing for people making more than 100K.
Despite this, property prices are still increasing elsewhere. This is a worst of all worlds scenario.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#184So they thought they saw a market opportunity and it didn't pan out and now they're panic selling because they have too many houses on their balance sheet. Ain't nothing new about this and in any liquid market you will have people who think they can corner the market and make money. The markets see-saw between greed and fear and there will always be those who want to allocate capital to gain from it. If you're a value investor, you're actually waiting for something like what Zillow has managed to do i.e. over leverage themselves and now will have to rapidly get rid of assets as they're probably hemorrhaging money. They'll sell pennies on the dollar and I'm sure the likes of blackrock will swoop in and get those assets. Nothing new here guys!
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#185I hope this bubble bursts. In less than 3 years the rent in our working class city went up 45%. Not to mention the absurd qualifications one needs to rent. 4 times the income to rent, very good credit and background checks. This is not sustainable for working class people.
> In less than 3 years the rent in our working class city went up 45%. I sympathize with that but I want to make sure people understand the dynamics. Prices are driven by supply and demand. If there's only one empty apartment in the city and you're willing to pay $2000/month, I am gonna have to pay $2100 month if I want to live there instead of you. That's sort of separate (though related to) prices of houses. What w…
> one way to drive prices in your city down is to have some even that renders it undesirable (..., defund the police ...)
there are so many problems with your post but the assumption that defunding the police is necessarily going to cause prices to collapse is probably the most obviously biased one.
the idea that you should view housing as simply a matter of supply and demand and not consider any externalities is an abominable position. All people need shelter, it's not something that people opt into for the enjoyment of it alone. By the logic you have presented, the top 1% of people banding together and buying up all of the housing and squeezing everyone else is perfectly fine if it makes the numbers look nice, regardless of how it affects people's lives. The way you have framed the problem is inhumane.
Another way to make rent more affordable is to raise the tax rate on income generated from residential rentals to the point that people are not buying up all of the housing stock for the sake of investment alone. Income from residential rentals is taxed at the same rate as ordinary income, the kind you get from actually doing something. Why would anyone work if they can just own someone else's house instead?
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#186Sounds like they got in too close to the peak (not to mention delays & increased costs in refurb) and didn't factor increased carrying costs on the potential that these would sit on the market a bit longer if they wanted to sell at a higher premium. A hard lesson for them that listing aggregation & analysis of the market is far different than direct investments & flipping. Flippers take a big risk and offset inevitab…
I think there's more going on here than simply RE speculation. Most importantly, Zillow is building capability. Capability to buy & sell quickly through processes, tooling, networking, and brand recognition. There is a long play here. Zillow's goal has always been to fully disrupt the real estate market. Why should this stop with brokerages and agents? Shouldn't investors also be on the list?
> Investors
Sure, medium/large flippers may have investors putting up the money.
And I agree that Zillow is not likely backing out of the game all together. They just had an expensive lesson learning what they don't know about how to go about this. But their current strategy was also only viable during rapid price increases. A completely different one is needed in other market condition.
Making money flipping in a flat market is even harder: It takes more work to find depressed homes at below-market prices. There's no good algorithm that will do that without boots on the ground looking at the property in person, not to mention the surprises you get when you open up the walls or floors to start a refurb. That doesn't mean Zillow can't do it: what I'm saying is that it's very much not in the realm of their core competencies. Building out large scale logistics networks for this IRL is much different than their current line of business. I'm sure they'll try again, but I'm also almost as sure that they'll have a few more significant stumbles along the way.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#187Earlier quoted context omitted.
"The real problem is people that prevent additional housing from being built." If you go deeper, it's about personal preferences and distribution of jobs. There are plenty of areas that allow houses to be built and have affordable houses. Many of those places may have limited job choices, although remote is becoming bigger. If companies didn't cluster as much, then overpopulation or constrained resources in specific…
"But there's also the side of people wanting single family homes instead of apartment' Most people who can't afford a home would not reject a decent apartment, they just want somewhere to live. Also those are not the only two choices, there are duplex and triplex homes, illegal in most of us, and other variations https://youtu.be/CCOdQsZa15o "Nothing wrong with people in a community wanting to set standards for their…
"So in this "democracy" people who don't own a house have no voice and no right?"
You don't have to own a house to vote. This isn't the 18th century where only land owners vote. If you have a sufficient number of renters, they can outweigh the owners.
For example, a municipality in CA decided to raise taxes on land lords of rentals. Land lords didn't want this, the renters did (probably misguided since the cost gets passed on to them).
"Why does this remind me of some other mechanism for opressing undesirables?"
You could tell us instead of being rhetorical. Otherwise the obvious answer is that you are missing details in your comparison and wrongly concluding that it's about oppression.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#188This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…
Correction, Zillow core business is crappy advertising
Zillow also gets a lot of revenue from referrals to mortgage lenders.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#189This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…
I wouldn't be too quick to claim that the myth of institutional house buying has been dispelled. Zillow isn't the only company out there buying real estate, and they are planning to sell most of the properties to other institutions and landlords, not the open market of owner occupiers. It appears they made some errors in their calculations and temporarily bought too many houses at too high a price but the article say…
I've never seen any good data that supported the myth of institutional house buying being a big enough phenomenon to affect homeowners.
It was never apparent in the homeownership rate (https://fred.stlouisfed.org/series/RHORUSQ156N) which has been broadly stable for decades, and the jumps over the last few years are, if anything, towards increased homeownership, not less.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#190Earlier quoted context omitted.
Where do you live that it takes "months upon months" to close a sale? Usually the complaint is that the market moves so fast people have to make risky snap purchasing decisions.
> Where do you live that it takes "months upon months" to close a sale? Usually the complaint is that the market moves so fast people have to make risky snap purchasing decisions. IIRC, when I bought my home, the closing date was about two months after we'd made the deal with the seller. But that's not as long as it seems: there's stuff you have to do in that time, like getting the inspection done, haggling over any…
Buyers frequently waive the inspection contingency in hot markets with limited supply. Sellers are more likely to accept offers with fewer contingencies.