Every few years, people learn once again that housing prices don't always go up and the owners cannot dictate prices.
Supply + demand. It's the law!
Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
271–280 of 476 posts
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#272And yet the Fed keeps printing the easy money. https://fred.stlouisfed.org/series/M1SL
That graph is alarming.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#273Earlier quoted context omitted.
Because they would outbid people who actually want to live in those homes, essentially front-running the middle class to earn a massive profit.
> Because they would outbid people who actually want to live in those homes If they outbid everyone who actually wanted to live there, who were they planning to sell to? :P Buying things you think are underpriced and reselling them is not frontrunning. (Ever since GME, a lot of people learned the word frontrunning and started using it in every possible situation.) Zillow's plan was to act as a market maker. Market ma…
>If they outbid everyone who actually wanted to live there, who were they planning to sell to?
other investors. housing is only "underpriced" because it's become a commodity market that investors play in. the people who want to live in the houses have no hope of affording them when they have to compete with all the various capital funds that are buying houses and hoping to flip them to other capital funds using a slightly different algorithm to calculate value.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#274Earlier quoted context omitted.
Overpaying for a house is not a problem in an appreciating housing market. If you overpaid for a house, just wait for its actual market value to catch up and voila, no loss. The reason you fire-sale that house at loss, is because you believe market value is unlikely to catch up.
Nitpick but the reason you fire-sale that house at loss is because you don't believe the market will catch up in your beneficial timeline. The housing market historically has a pretty slow appreciation rate, but one that is fairly predictable. Maybe Z sees the incoming rate hikes as a high volatility event?
Holding onto inventory is death. In auto and housing sales if you’re a dealership you’re leveraged in order to hold that inventory (paying interest on it, less friendly interest than you get as a government backed mortgage borrower) and you’re paying insurance and maintenance on that inventory. Vacant houses depreciate very quickly.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#275Crazy. I recently sold a condo to Opendoor for significantly more than I would have even thought to list it for. When I negotiated with Opendoor after their initial offer, I pointed out a recently sold condo (days before, in similar condition, layout and finishes) in the same complex that sold for much higher than Opendoor offered. Within hours Opendoor came back matching that same selling price. The kicker? It was a…
Very much like the $5000 books on Amazon where the algorithms are anticipating flipping an existing listing. Congrats on winning this round! The next step might be interesting which would be to go back and re-purchase the Condo once the price corrects to the 'real' price and bank the difference. I have read this article and the one before it and it sounds very much like some folks who fell in love with their own idea…
I knew about the brake wave back in 1980, as I could see it on I405 on my way home from work. Due to a curve in the highway, I could see about 3 miles ahead. The wave heading towards me was pretty obvious.
I found I could "break" the wave by letting a gap grow in front of me that would absorb the wave, and I wouldn't have to brake to a stop (and so my clutch would last longer).
It never occurred to me to write a paper about it :-)
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#276When I saw Zillow doing this, I honestly thought it was for a different reason than pure profit on houses. I thought they wanted to take over the MLS.
The reason that local realtor groups will never get displaced by a Zillow is that in almost every area, those local realtors control access to the MLS. But...if a company like Zillow could come along and get a significant number of listings in an area that weren't represented on the MLS then Zillow could start to replace the MLS in that area without fear of being cutoff by the local realtor group.
To see that all they were trying to do was make money flipping houses...I'm honestly a little shocked.
But, this gets me back to my belief that Redfin is the only tech company in real estate with a real chance to be disruptive.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#277This is kind of a big deal in the real estate sector. The only reason that Zillow would sell everything right now is if they believed that the carrying costs of the properties until they (eventually) sell would eat all of their profits. They must be seeing flashing red signs across the board that there's a slowdown in the market and that scenario is exactly what will play out if they don't exit quickly. There's no wa…
If you're buying a home right now, make sure you're moving somewhere you're willing to live for a while and that you're not going to be in financial duress if your home loses 20% of its value. That's an odd way to say "I think you should probably consider renting right now" (which is absolutely what you should do if you think housing is likely to drop 20%).
I actually don’t think you should be renting right now. Even if house prices were to fall by 20% tomorrow it would still be cheaper to own than to rent in most cities right now. That may not be true as interest rates move higher down the road.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#278> ‘We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,’ CEO tells investors. That's quite a statement. The head of a company with a privileged view of the US residential real estate sector says that the market is "unpredictable." Not the good kind of unpredictable where yo…
Your last sentence is really ironic given the article it is replying to. If Zillow really new the market so well, they wouldn't be in this position in the first place.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#279Earlier quoted context omitted.
Zillow basically bought homes, repainted them, then sold them. Why is this so villainous?
they bought homes and flipped them at a high enough volume as to artificially inflate the price of housing. artificially driving up the prices of basic human needs is literally Bond villain behaviour.
"It's a Wonderful Life" villain behavior.
Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff
#280We recently went through buying a Zillow owned house in Phoenix AZ and response and attitude from the selling agent and zillow was pathetic. They took 3 full days to send the signed contract after they told us we our offer was accepted. Couldn't get the inspection done within first 9 days(inspection contingency is 10 days) of signing the contract and only got a response when we said we were going to cancel escrow. Go…
You get what you pay for.
I tried using a discount broker back in the day, my experience was similar to yours.