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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

#331

Post by teclordphrack2 »

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…

But there is already a market and for the cost of a home people don't JUST check facebook market place. Right?

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

#332

Post by xapata »

davnn wrote: post #324
AareyBaba wrote: post #16

Earlier quoted context omitted.

I suspect the 'AI software' running these companies is using linear regression to predict housing prices and one of the inputs is the price of similar houses nearby.

There was a Kaggle Competition in case you missed it. At least here you can see what kind of features they are using and what models people employed. See https://www.kaggle.com/c/zillow-prize-1

Zillow Offers team was isolated from the Zestimate team. They didn't share algorithms.

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

#333

Post by xapata »

KingMachiavelli wrote: post #309
lsh123 wrote: post #231

Earlier quoted context omitted.

One thing I don’t understand is that many people who buy houses in Phoenix believe in Global Warming getting worse in the short term (source: lived in Phoenix for a year, considered buying a house there, and spoke with many folks who just moved or were about to move).

Hot and dry is not that bad from a global warming standpoint. Evaporative cooling is very effective and efficient so it's actually less energy intensive heating in colder locations. The plentiful amount of space and days of sun makes solar energy very practical. The nights can get pretty cold so it means that certain evening hours are actually very comfortable.

Except for drought problems.

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

#334

Post by SomewhatLikely »

nradov wrote: post #29
d136o wrote: post #12

Sigh… It’s interesting that they blame the ML models, on the one hand it seems like a perfect example of ML gone wrong, on the other hand losses at this scale (hundreds of millions) don’t just signal that some data scientist’s model was not accurate enough… who’s running the ship over there? The ML model? Also I’m really curious about the geographic distribution of their inventory… let’s do some Data Science on this…

It's not really ML gone wrong , more like a misapplication of the technology. No one who understands ML ever claimed it could produce accurate forecasts of chaotic systems.

Weren't there headlines recently about a Google deep learning model producing the most accurate weather forecasts? Weather after all is the system from which chaos theory was first inspired.

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

#335

Post by LordDragonfang »

seanmcdirmid wrote: post #325
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.

Being a landlord actually involves a lot of work and risk. If it were free money, everyone would do it and it wouldn’t be free money anymore. I don’t have the nerve or free to be a landlord myself, but I’m sure I own some small parts property management companies via the index funds I own shares in.

As someone who previously worked for, and is also the child of, landlords, I can attest to the fact that, yes, there is some work and some risk, but you're wildly overselling it.

The reason "everybody" doesn't do it is that in order to do it, you have to already have money (even if you can do it on a loan, the terms won't be favorable unless you have significant starter capital). At that point, it's basically free money, yes, to the extent that you can pay someone to do all the actual work for you and still make a comfortable income.

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

#336

Post by selcuka »

oarabbus_ wrote: post #313
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?

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.

Not the same thing though. The ceiling here is about affordability, not the value of the asset. A house is a need for the individual buyer, not an investment.

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

#337

Post by kgwgk »

eru wrote: post #284
nradov wrote: post #227

Earlier quoted context omitted.

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.

Which may not be a good alternative.

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

#338

Post by LordDragonfang »

pbourke wrote: post #319
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?

Not GP, but wiping out the externalities of property being used as a capital investment vehicle instead of for its inherent utility seems like it would inarguably, in any rational market system, make housing more affordable. It's self-evident that it would be better for anyone without a vested interest in denying the housing needs of the many.

If there absolutely must exist a category of housing that is rented and not owned, that's where the state can step in. Housing, like healthcare, is a commodity with perfectly inelastic demand in the aggregate. Offering such a commodity up to the "free" market is irrational in any system except one that values ability to make a profit over human rights.

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

#339

Post by fspeech »

WalterBright wrote: post #275
ChuckMcM wrote: post #102

Earlier quoted context omitted.

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 pape…

"by letting a gap grow in front of me that would absorb the wave" would cause the freeway to carry fewer cars if everyone does it. My oldest one used to argue with me on this point when I asked him to keep a bigger gap from the car in the front for safety reasons.

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

#340

Post by LordDragonfang »

pbourke wrote: post #321
Thetawaves wrote: post #314

Earlier quoted context omitted.

Of course.

Car rentals? Tool rentals? Camera equipment rentals? Leeches, all of them?

You're being disingenuous. All of those things you listed fulfill a temporary or geographically localized need, and are very short term. On the other hand, people often spend an entire generation in one apartment. Those categories are wholly unalike each other, and it's clear because the category of actually short term housing also exists, hotels.

Likewise, long term car rentals exist, they're called leases.

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