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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

#261

Post by ipaddr »

dlp211 wrote: post #160
judge2020 wrote: post #29

Earlier quoted context omitted.

> The downside If this wasn’t another house in the same neighborhood then the differentiator most certainly wasn’t Zillow or their pricing.

Why is this being downvoted. It's completely correct. The value of a home purchase is not just the building, but the land it sits on. OP got a bigger, more modern house, with a larger yard for less, but it's meaningless until we understand the market circumstances of both homes for sale. It could be that Zillow is overpriced here, or it could be that Zillow is properly priced, we have no idea from the information pro…

You missed better location

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

#262

Post by brk »

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 didn't mean it that way, and it's all relative really. There are a ton of houses above and below my price point.

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

#263

Post by Zircom »

dataflow wrote: post #202
TimPC wrote: post #125

Earlier quoted context omitted.

These laws are hard to get actually correct. The major problem is court delays. There is a very high bar for kicking someone out before they get their day in court about whether it is fair to do so. This seems eminently reasonable but there is also a severe shortage of judicial services that result in court dates over a year out to resolve such issues. In that year of time, it's quite possible for a tenant with maybe…

How does one accumulate $500K in damages and debt in 1 year? That's like $41k/month.

Some people don't take kindly to being kicked out, even if they're in the wrong, and there's not a lot you can do to stop them from causing hundreds of thousands in damages while you go through the process of evicting them.

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

#264

Post by lotsofpulp »

giraffe_lady wrote: post #252
jsnk wrote: post #224

Earlier quoted context omitted.

This analogy is quite lacking. You should also mention that this medicine rich people are collecting also has dozens of other alternative medicines with hundreds of thousands in volume because other cities exist. Also you should mention that some of these rich people are not rich people at all, but working class people who's lived in a location for decades which has become a desirable location in recent years thanks…

Cites are not fungible, I hate that this always comes up. I have relationships here going back to my childhood, I sometimes visit the grave of the person I am named for, I spend every sunday afternoon cooking and eating with the 97-year-old who took me in and nursed me back to health decades ago. If I move to another city these things aren't coming with. Now you can dismiss these things as inherently less meaningful…

> A necessity of life has become a competitive investment vehicle

My perspective is that a necessity of life (land) has started bumping up against the limits of nature. Population has drastically increased, and for various reasons such as increased access to information, economic agglomeration, etc, certain areas of land are in far more demand than others relative to supply.

Allocating scarce resources (sufficient land to have a detached single family home and a driveway) in such a scenario will always lead to some people getting what they want, while others do not.

Some options are (not exclusive to these)

-letting certain classes of people have higher priority than others (such as California’s law that keeps property taxes artificially low for those who were there before others)

-letting the amount of money determine who gets to live where, due to increasing house prices and commensurate increases in property taxes.

-changing zoning laws so that areas are modified from low density to high density housing, increasing the supply. This one causes various knock on effects, hence it is fought against in popular places that have reached its limits under the existing scheme (such as Bay Area and SFH)

There are no options where no one has to sacrifice. The investment vehicle aspect of land is negligible and more of a consequence of the extreme variations in demand of land in different regions.

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

#265

Post by cuteboy19 »

mywittyname wrote: post #192
cuteboy19 wrote: post #177

Earlier quoted context omitted.

> 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?

Because it's the law. Whether or not you agree with the law is irrelevant.

I think most of the answers to my question repeat this assertion, without really answering the "why?" part.

If you are a legalist, a loophole in the law is the law as well. So yes, whether or not you agree with the loophole is irrelevant

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

#266

Post by dlp211 »

ipaddr wrote: post #261
dlp211 wrote: post #160

Earlier quoted context omitted.

Why is this being downvoted. It's completely correct. The value of a home purchase is not just the building, but the land it sits on. OP got a bigger, more modern house, with a larger yard for less, but it's meaningless until we understand the market circumstances of both homes for sale. It could be that Zillow is overpriced here, or it could be that Zillow is properly priced, we have no idea from the information pro…

You missed better location

Better location is a completely subjective statement. Show me the comps.

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

#268

Post by cuteboy19 »

ramesh31 wrote: post #186
cuteboy19 wrote: post #177

Earlier quoted context omitted.

> 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?

>Does it physically destroy neighborhoods or just your perception of it? Yes, it does. People buy homes for more than financial reasons. Living in a community of homeowners with neighbors you've known for years is a completely different experience than living in a revolving door community of renters. There's been a whole decade of news reports about Airbnb ruining neighborhoods and condo buildings, to the point that…

So we should criminalize perfectly harmless things because it ruins your experience? It doesn't seem logical

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

#269

Post by c-linkage »

paxys wrote: post #40
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,…

One can blame Airbnb, Zillow or whoever else, but the truth is that speculation in real estate and vacation towns have both been a thing for a very long time. If the population rises and we refuse to build more houses, the existing ones will get more expensive no matter what. The solution is out there in front of us but everyone prefers to dance around it.

Change the word "house" to "car" and I think the problem becomes not-so obvious.

It's often bemoaned that personal cars are a waste of money and space: they sit idle most of the time, we have to build parking lots to accommodate them and that takes space. It would be so much better if we could just hire cars on demand! But this doesn't scale because the demand is not spread out during the day -- absent carpooling, you still need one car per person twice a day, meaning the supposed savings don't exist.

The same could be said for housing. If I'm at work all day, then my house is sitting idle (it's not housing anyone) and it takes up space. Why not let someone live in my house while I'm at work? This also doesn't scale but for a different reason: we all work during the day (excluding night-shift workers) so at night we still need one house per person (ignoring families, stretching the metaphor a bit).

Now add "vacation homes" into the mix, now you're looking at ~20% of housing (calculated from empirical analysis) in any vacation hot-spots being rental properties. This means that 20% of the existing housing that could be available for permanent residents is missing.

Saying "just build more housing" is just not realistic. 20% more housing is a ludicrous amount of housing!

Hotels, on the whole, are much more economical in space utilization because people who are going on vacation do not vacation to _visit a home_. They go to do things in the place they are visiting and are thus _not at home_.

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

#270

Post by civilized »

ipaddr wrote: post #257
civilized wrote: post #67

Earlier quoted context omitted.

Yes. The problem is: 1. A lot of high earners want to cram into a small space 2. The existing high earners living in that space don't want to allow more built in that space because they like the neighborhood how it is So all these high earners compete against each other, and houses become as expensive the winning high-earning bidders can afford. For this to stop happening, #1 or #2 needs to stop. So, either the high…

It can happen because new homes are more expensive. People prefer new and will pay more. That raises the average price which raises prices on the existing supply.

Or it lowers price on the existing supply because wealthier buyers are going to the new supply now rather than bidding up the existing supply.
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