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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

#291

Post by JKCalhoun »

roland35 wrote: post #41
onlyrealcuzzo wrote: post #26

Earlier quoted context omitted.

TBF - wasn't the Phoenix metro up almost 40% in one year? After a 14% cut, that would still be an absurd YoY increase (I think still the largest single year increase in a major metro in the US on record?). I get that Zillow is losing 14% - but the market is not yet even back to normal appreciation - let alone "crashing".

Here is the case shiller index for Phoenix - it is absolutely wild since 2020! https://fred.stlouisfed.org/series/PHXRNSA/

Tail end of the graph: looks like the graph approaching 2006.

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

#292

Post by forgotmyoldname »

anchpop wrote: post #203
iskander wrote: post #159

Earlier 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…

> Market makers make a profit by buying things and then reselling them for slightly more.

When a lower middle class guy in your town does this, he’s called a scalper and seen as a villain.

When rich elites do this with life essentials, they’re market makers doing a useful service.

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

#293

Post by KennyBlanken »

justinpombrio wrote: post #230
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…

> Despite maybe seeming like a useless middleman, the reason market makers can exist is because they provide a valuable service to the buyer and the seller. Well, and also because it's illegal in some states to buy directly from a car manufacturer, so you're forced to go to a dealership whether they provide value or not. Would eBay and Amazon be considered market makers, as they pair up buyers and sellers?

You're not forced to buy a car from a dealer; manufacturers are forced to sell new cars through dealers in order to guarantee owners have somewhere to go for service and parts.

Back in the early days of the auto industry car companies sometimes existed just long enough to sell some crappy cars and fold before angry customers with defective cars came calling.

That's why the laws around manufacturers having dealers exist, no matter what Elon Musk tells you.

Ever notice that bodywork, parts, and repairs for Teslas are very expensive and difficult to come by? Plenty of Teslas with relatively minor body damage end up in limbo for months or more even though the insurance company is ready to pay for repairs. Why? Tesla's bodyshops have long backlogs because there are no parts, because Musk is desperate to get as many cars out of his factory as he can.

Lots of Teslas also get totaled because Tesla charges outrageous pricing for replacement parts. Musk is exploiting the insurance industry.

Insult to injury is that Tesla can decide one day that your vehicle is too damaged for their tastes, and refuse to sell you parts. No other manufacturer does that, not even Ferrari, and that's really saying something.

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

#294

Post by stickfigure »

boopboopbadoop wrote: post #247
yanderekko wrote: post #183

Earlier quoted context omitted.

So if the previous owners moved out and then repainted the house and sold it for 20% additional value, would they be villains too? Or is it okay because they're "middle class" and Zillow's shareholders presumably are just yacht-owning billionaires?

You’re talking about one owner and one house. Zillow was attempting to do it at an industrial scale.

There is already a gigantic industry of people who buy houses, fix them up, and sell them. Doesn't seem very evil.

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

#295

Post by angelzen »

not2b wrote: post #125
gibsonf1 wrote: post #119

Earlier quoted context omitted.

That doesn't sound like an algorithm mistake, just like a policy to match sales nearby at the same price because of the assumption that prices will just keep going up coupled with the stupidity of not tracking what you've bought so far - yikes! Oh, on second thought, I guess it could be algo as that previously bought nearby condo could have been priced using some crazy algorithm.

"Prices will keep going up" was a key belief that triggered the 2008 real estate crash. They keep going up until they don't, and then the house-flippers who weren't careful enough and the lenders that approved "liar loans" get burned badly.

They keep going up until they don't, and then the Fed quantitatively eases the losses. Sounds like Zillow's problem was they didn't sink enough money into their scheme.

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

#296

Post by pertymcpert »

grayhatter wrote: post #270
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…

> It's the rent seeking leeches of society that think that by buying a "portfolio" of houses, they can live out their lives without contributing society in any way What implication am I supposed to take from this? Everyone has must contribute meaningfully to society or they're shit? > Anyone arguing against this has either a dog in the race, or loose screws in the head So if I don't already agree with you, I'm either…

No, they're saying if you rent seek without contributing anything then you're shit. Which is correct. If you just contribute nothing then you're ahead of these rent seekers.

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

#297

Post by stickfigure »

engineer_22 wrote: post #167
AussieWog93 wrote: post #136

Earlier quoted context omitted.

In defense of Zillow, they weren't looking to buy a "portfolio" of houses - they bought as many as they sold, and didn't have any net negative effect on housing supply. Yes, they're profiting off of a bad situation, but they're not the cause of it. Bev from the local council's planning department, as well as Michael Caton's horrific propaganda piece, has done more damage than every flipper combined.

Sounds like they have a couple billion in inventory. No matter how you slice it, they were speculating on housing inflation.

No, not at all. They were trying to set themselves up as a market maker. They did not want to hold a position. They screwed up and got behind, which incurred the risk of the market moving against them (it did).

Matt Levine's Money Stuff column covered this in detail. Incompetence, not villainy.

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

#298

Post by grayhatter »

pertymcpert wrote: post #296
grayhatter wrote: post #270

Earlier quoted context omitted.

> It's the rent seeking leeches of society that think that by buying a "portfolio" of houses, they can live out their lives without contributing society in any way What implication am I supposed to take from this? Everyone has must contribute meaningfully to society or they're shit? > Anyone arguing against this has either a dog in the race, or loose screws in the head So if I don't already agree with you, I'm either…

No, they're saying if you rent seek without contributing anything then you're shit. Which is correct. If you just contribute nothing then you're ahead of these rent seekers.

So am I allowed to 'rent seek' if I also contribute? Or is 'rent seeking' so bad, merely contributing isn't enough? Is there an amount of rent seeking that's ok? Or is any amount of rent seeking egregious enough to get you on the shit list?

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

#299

Post by jachee »

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?

“Upwardly Mobile Consumer” seems to fit, but I’ll admit it’s a guess.

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

#300

Post by dd36 »

trident5000 wrote: post #155
copenja wrote: post #148

Earlier quoted context omitted.

According to this article[1], large investment companies accounted to 16.1% of all single family home sales in the US in Q2. I'm not an analyst. But, I would think that would be plenty of extra demand to influence the price?

Investment companies are far less likely to lead a speculative bubble than retail buyers. They are professional investors who go through a valuation process. They have also always been part of the market.

Institutional investment in single family housing stock is brand new. Less than a decade old.
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