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

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

#341

Post by dumbfoundded » Wed, Nov 03, 2021, 6:23 AM UTC

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?

It's actually pretty simple to break it down if you try to think about it. Rent seeking is evil when the renters absolutely need the service and cannot afford ownership. Otherwise, it's a service that some find useful. Home rentals would be awesome if it was only for vacations or because someone didn't feel like dealing with maintenance. In reality, everyone needs a place to sleep at night and many cannot afford it. The people who make it unaffordable to own a home by buying up all inventory and then renting it back are absolutely leaches. Comparing camera equipment rentals to home ownership likewise lacks morality.

In the San Francisco for example, the minimum wage is $16.32/hr or ~$33K/year. The median price per square foot is $1000/sqft. A person earning minimum wage will never be able to buy property in San Francisco. Instead they're forced to spend most of their income on rent creating a cycle of poverty by preventing property ownership & wealth accumulation. The property owning class of the Bay Area desperately depends the poverty class yet burns the ladder up. We complain about the homelessness and crime yet trap people into poverty by blowing up every bill that would create affordable housing.

I will absolutely cheer for the failure of any company looking to profit from exacerbating the problem. I hope you can now understand the difference between renting a camera and being permanently unable to afford a place to sleep.

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

#342

Post by rsj_hn » Wed, Nov 03, 2021, 6:24 AM UTC

AgentOrange1234 wrote: post #329

anchpop wrote: post #316

Earlier quoted context omitted.

Scalpers don't provide liquidity, market makers do

Why don’t scalpers provide liquidity? If Alice has season tickets to a basketball team, and Bob buys some of them to scalp later, isn’t he adding liquidity? I know nothing.

Of course they provide liquidity.

But the whole point is that the entertainer doesn't want liquidity, they want illiquidity, for two reasons:

1. The marketing value of a ticket being impossible to obtain. The best way to do this is to sell the ticket below the market clearing price. Then you get rows of people sleeping before the day they go on sale, etc. A lot of people want that image as they believe long term the marketing will generate more revenue.

2. They want fanatical fans rather than rich fans. They may feed off the worship or cheering and want those who go through a lot of hoops to get the tickets, rather than a salesman using the company expense account to wine some client who might not throw their bras on the stage or paint their face green and scream for their team. In this sense, you can think of the money the entertainer gives up by selling below market as the purchase price of audience enthusiasm.

Now if the scalper steps in, and instead of having the underwear tosser you get the businessman, then many entertainers/performers would be pretty upset as the scalper took for themselves the enthusiasm payment and left the entertainer with the market-rate fans.

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

#343

Post by moconnor » Wed, Nov 03, 2021, 6:25 AM UTC

withinboredom wrote: post #212

rflrob wrote: post #100

Earlier quoted context omitted.

My favorite story of algorithmic pricing gone mad was discovered by a postdoc in my grad school lab, leading to an out of print book being listed on Amazon for over $23 million: https://www.michaeleisen.org/blog/?p=358

I worked on software that did algorithmic pricing. It was a race to the bottom because some bozo wanted to be on the first page of sellers. So they’d price it one penny under the lowest price. The next seller would match it. Before you knew it, the product was worth dollars or cents. We also had people do it on purpose (we called it price bombing), but that was easy to negate since we filtered out competitors with lo…

Why does pricing competitively to appear in the front page earn the label “bozo”? Should they prioritise the effects on the market ahead of their own profits or goals?

It sounds like a really interesting story that’s missing a few steps due to space - it’d make a great blog post in detail!

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

#344

Post by snovv_crash » Wed, Nov 03, 2021, 6:31 AM UTC

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…

Brake waves happen because people brake harder than they accelerate afterwards. If you have enough following distance to brake gently, then hit the gas hard afterwards, and if everyone did this, then the waves would never appear.

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

#345

Post by satellite2 » Wed, Nov 03, 2021, 6:32 AM UTC

rsj_hn wrote: post #308

dd36 wrote: post #300

Earlier quoted context omitted.

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

Nevertheless they are not buying houses for emotional reasons, but for the income stream. FYI, the reason this is happening is that interest rates are so low that people are desperate for yield, and rental yield fits the bill. There are a lot of benefits: - professionally managed properties. Most small time landlords are incompetent -- the horror stories you see about landlords being petty or vindictive is from the s…

> home prices track construction costs

But construction costs track home price so this doesn't prevent an unbounded faster than inflation growth.

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

#346

Post by mavhc » Wed, Nov 03, 2021, 6:32 AM UTC

fspeech wrote: post #339

WalterBright wrote: post #275

Earlier quoted context omitted.

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.

Not if they all go faster. The human induced delay is the problem. Plus it causes accidents, which really slows down the system.

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

#347

Post by socialist_coder » Wed, Nov 03, 2021, 6:32 AM UTC

gravypod wrote: post #99

datavirtue wrote: post #66

Earlier quoted context omitted.

Flipping is extremely high touch.

If you're already in the market of buying/selling homes and you find a good contractor for your area (if you plan on making any changes) then it can be low touch. Zillow, in many cases, just bought and instantly relisted the property on their own site.

> you find a good contractor for your area

This is the hard part. All the good contractors do this themselves, or they charge so much you don't make any money on the sale, or they're booked out 3 months in advance.

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

#348

Post by mavhc » Wed, Nov 03, 2021, 6:35 AM UTC

withinboredom wrote: post #212

rflrob wrote: post #100

Earlier quoted context omitted.

My favorite story of algorithmic pricing gone mad was discovered by a postdoc in my grad school lab, leading to an out of print book being listed on Amazon for over $23 million: https://www.michaeleisen.org/blog/?p=358

I worked on software that did algorithmic pricing. It was a race to the bottom because some bozo wanted to be on the first page of sellers. So they’d price it one penny under the lowest price. The next seller would match it. Before you knew it, the product was worth dollars or cents. We also had people do it on purpose (we called it price bombing), but that was easy to negate since we filtered out competitors with lo…

Now most used books on Amazon cost 1 cent, with $10 shipping costs, because that's the default sort

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

#349

Post by sangnoir » Wed, Nov 03, 2021, 6:37 AM UTC

fspeech wrote: post #339

WalterBright wrote: post #275

Earlier quoted context omitted.

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.

But it could arguably increase the throughput (easier to on and off).

Which is better: more vehicles on the freeway at lower average speeds - or fewer, faster ones?

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

#350

Post by jldugger » Wed, Nov 03, 2021, 6:39 AM UTC

silisili wrote: post #49

I don't get Zillow's play here. They were for a long time the de facto neutral party everyone used to look at houses. Great. Then they got into doing contracts apparently, still OK. Then they started competing against people and overbidding everyone, at the height of what appears to be the biggest housing boom of my lifetime. This was not only apparently financially dangerous, but an act that puts them in a bad light…

> I cannot think of how anyone thought this was an OK idea.

I imagine they felt the only way to prove how good their Zestimates are was to start acting on them.

And it's entirely possible that the problem is they have spent the last 10 years tweaking their Zestimate algos to make listing agents happy, increasing prices. Like, nobody sues you when your estimate is too high, but when you get it too low, get your legal counsel prepped: https://www.marketwatch.com/story/do-zillow-zestimates-misle...