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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

#311

Post by foogazi »

ChuckMcM wrote: post #102
muttantt wrote: post #11

Crazy. 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…

Your comment on traffic reminded me of this article I read a long time ago about how to clear up “traffic waves”: http://trafficwaves.org/trafexp.html

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

#312

Post by KingMachiavelli »

azth wrote: post #306
pertymcpert wrote: post #296

Earlier quoted context omitted.

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 you can say the same about money lenders, right?

Lending money endures risk. Landlords do have some risk but in the current supply side limited housing market the risk is drastically lower than the typical returns. e.g the bond market is probably a lot closer to the market equilibrium than the housing market. There are no NIMBYs in the bond market.

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

#313

Post by oarabbus_ »

selcuka wrote: post #220
derefr wrote: post #92

Earlier quoted context omitted.

> house prices have a fundamental ceiling, and it is determined by the size of the monthly payment that banks will allow the typical homebuyer to assume when approving a loan. In the more irrationally-hot markets, why assume that housing is even being purchased on a mortgage by your average home-buyer, rather than being purchased cash-in-hand by a private or corporate investor looking to park wealth they've already g…

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?

P/E ratios of much of the S&P500 would indicate prices/values far over the fundamental value, yet investors continue to flock to large-cap equities in droves.

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

#314

Post by Thetawaves »

azth wrote: post #307
zwkrt wrote: post #301

Anyone whose main income is from other peoples rent has an incredible amount of explaining to do if they want to claim that they are anything but a useless leech.

And so are money lenders, correct?

Of course.

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

#315

Post by oarabbus_ »

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.

History indicates the opposite. The largest speculative bubbles in history are typically driven by professional investors or high-net-worth individuals, not retail buyers.

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

#316

Post by anchpop »

forgotmyoldname wrote: post #292
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…

> 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.

Scalpers don't provide liquidity, market makers do

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

#317

Post by KingMachiavelli »

forgotmyoldname wrote: post #292
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…

> 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.

The key is that market makers are doing large volumes at very small margins. The market maker just needs to guess the market movement direction for the next interval of time (stocks would be sub second timescale, homes could be daily/weekly, etc.) then they can adjust what they buy and sell very slightly to profit from this spread.

If the spread is a large percentage of the assets value then it doesn't work as well and public perception is more negative. The housing market is much more difficult to properly become a market maker in because the transaction costs are high. The seller's realtor is going to want their >=3% commission. There's other costs like title transfer fee/cost, inspections, etc.

Also scalping is typically more of product's that are impossible to otherwise obtain and are sold at a huge premium.

I think Zillow frequently tried to make the seller cover these costs (whether directly or via a lower offer amount) but it seems they didn't do this successfully. It's also possible that the seller's who accepted Zillow's offer tended to have some X factor that would make their house more difficult to sell but properly handling every possible X factor is very difficult.

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

#319

Post by pbourke »

zwkrt wrote: post #301

Anyone whose main income is from other peoples rent has an incredible amount of explaining to do if they want to claim that they are anything but a useless leech.

> Anyone whose main income is from other peoples rent has an incredible amount of explaining to do if they want to claim that they are anything but a useless leech

What would you envision as the alternative to tenanted apartment complexes?

Let’s say you could wave a wand and outlaw rental housing as a business. Do you think the world would be a better or worse place?

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

#320

Post by ChuckMcM »

ahmadss wrote: post #189
ChuckMcM wrote: post #160

Earlier quoted context omitted.

I will see if I can find it, not all papers published in the 80's are online. (and I just looked the professor is emeritus at USC now but still around so I'll send him the question too)

yes please do find that paper (or the name of the professor)!

I believe the paper's author was Newell, but the USC professor was Dr. Kuehl (Dr. Cool :-). He was teaching Linear Systems when I was there and always had some really great "real world" applications of the stuff we were learning.
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