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Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

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Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#281

Post by mikewarot »

anchpop wrote: post #251
whimsicalism wrote: post #249

Earlier quoted context omitted.

> If they outbid everyone who actually wanted to live there, who were they planning to sell to? :P I mean, exactly - they lost $550 million. Didn't stop them from burning massive capital reserves to outbid tons of people and fuck up the market a bit for them on a bad bet.

So they basically gave $550 million to UMC homeowners by overpaying for houses, while making it slightly harder for other UMC wanna-be homeowners to buy homes for a couple months. Not the worst outcome I can imagine

What does United Methodist Church have to do with this? UMC?

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#282

Post by bgentry »

woeirua wrote: post #7

This 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…

There's no way that OpenDoor doesn't follow them out the door here in the next couple of months. The business model is exactly the same. Anecdotally I haven't seen any reason to think OpenDoor is doing much better around here.

lol, there is zero chance that Opendoor stops iBuying in the short term.

They are indeed much better at systematically valuing houses than Zillow. This was already the case 5 years ago when I worked there, and they have relentlessly improved on their core model since.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#283

Post by mikewarot »

devnull3 wrote: post #253
enlyth wrote: post #113

Good riddance, I hope this company burns to the ground The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in…

> buying a "portfolio" of houses, they can live out their lives without contributing society in any way A lot of people want this. Its basic human nature ... take or construct the path of least resistance. Its just that most people cannot do this and only top 1% can. The whole FIRE movement makes ppl aspire for the day when they can live on passive income from the savings/investments. https://en.wikipedia.org/wiki/FI…

When we used to have a functional banking system, you could work your ass off, make your money, and simply put it in a savings account, or Certificate of Deposits (CDs), and make 4-8 percent interest while inflation was 2-3%. That money was reinvested locally as loans to local businesses.

The advent of free money to cover the insolvent institutions caught making stupid decisions, but managing to be "too big to fail", stole a lot of money from local economies, and my parents.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#284

Post by eru »

nradov wrote: post #227
selcuka wrote: post #220

Earlier quoted context omitted.

If the current value of something is over a "fundamental ceiling" it means that it's already inflated. Why would an investor park their wealth in such an asset?

Sometimes there's just no good alternative. And real estate has less strict AML/KYC laws than other asset classes so we have some shady foreign money coming in.

> Sometimes there's just no good alternative.

You can always just stick your money in an ETF.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#285

Post by JakeTheAndroid »

notatoad wrote: post #273
anchpop wrote: post #203

Earlier quoted context omitted.

> 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 sli…

Why would other investors buy an overpriced home? They are also looking for the deals that Zillow is hoping to find. Owners wanting to live in a home are the ones willing to buy a turnkey home above asking.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#286

Post by insaneirish »

robocat wrote: post #243
enlyth wrote: post #113

Good riddance, I hope this company burns to the ground The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in…

> If you lie to yourself that it's people who are trying to move up the housing ladder, remember that your flat appreciating 50% in 2 years means the house you want to move into by selling your flat also appreciates 50%, so you win nothing I think that is a little myopic. Older buyers that are downsizing can make an excess profit in that situation. Although perhaps if excess numbers are downsizing to the same retirem…

> I think a better way to think about it is that you need to own 1 house. If you don’t own a house, then you are shorting the housing market. If you own 2 then you are long the housing market.

You are born short housing.

Relevant: https://thezikomoletter.wordpress.com/2012/12/10/you-are-nat...

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#287

Post by anchpop »

mikewarot wrote: post #281
anchpop wrote: post #251

Earlier quoted context omitted.

So they basically gave $550 million to UMC homeowners by overpaying for houses, while making it slightly harder for other UMC wanna-be homeowners to buy homes for a couple months. Not the worst outcome I can imagine

What does United Methodist Church have to do with this? UMC?

Upper Middle Class

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#288

Post by anchpop »

notatoad wrote: post #273
anchpop wrote: post #203

Earlier quoted context omitted.

> 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 sli…

Your thinking is that there is a hierarchy of capital funds, each one willing to pay more than the last for the same house? And they all hold the houses, pay property tax, etc. despite the houses never generating any revenue due to no one living in them? That doesn't seem like a very realistic perspective on the housing market

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#289

Post by qqqwerty »

acchow wrote: post #147
enlyth wrote: post #113

Good riddance, I hope this company burns to the ground The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in…

Zillow basically bought homes, repainted them, then sold them. Why is this so villainous?

I take issue with the cheap flips. This type of flipping is really only possible in a hot market where inspection contingencies are regularly waved. Cheap flips are basically robbing the community by lowering the quality of the housing stock and leaving future owners with higher maintenance costs. In a more balanced market, these houses would either drop in price or linger on the market until the owner did worthwhile improvements.

Granted plenty of mom and pop flippers are doing cheap flips in this market as well. Zillow was just jumping in on the action at a much larger scale. But if I was king for a day, I think I would pass a law that required inspection contingencies on all residential real estate transactions. And maybe some sort of escrow for undisclosed maintenance issues that occur in the first year or two after the sale.

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