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

#391

Post by thom » Wed, Nov 03, 2021, 9:15 AM UTC

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…

In addition to back testing models like this, it’s always worth running forward simulations of what would happen if some/most/all agents in the simulation shared your new strategy.

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

#392

Post by gjulianm » Wed, Nov 03, 2021, 9:24 AM UTC

michalu wrote: post #386

gjulianm wrote: post #382

Earlier quoted context omitted.

> What if the money you buy the properties with is a result of your contributions? This isn't math. Prior "good" contributions to society don't even out "bad" contributions, no matter how we define them. To put an extreme example, you're not allowed to steal from anyone no matter how many people you helped recover their money from scams. > What is the optimal path to reap rewards of my contributions? It's very easy:…

You're manipulative with words ... "bad" contributions is something that's not a part of this discussion and buying a property to rent is not a bad contribution only for people with contradicting also selfish interests (I want to buy myself a house cheaply) ... maybe that's why you see "no need in going into deep philosophical discussions". Human rights is a nice buzzword used very loosely and it tends to mean whatev…

> "bad" contributions is something that's not a part of this discussion

It is, the GP said that renting is a leech and you said "but what if I buy the house with money from my contributions". If doing something is bad (however you define bad) for society, it is bad no matter how many good things you did before.

> buying a property to rent is not a bad contribution

A lot of people have already explained how it can be a bad contribution. People need houses to live, and that's not optional. By buying a house to rent you're taking it out of the market, maybe from a family that wanted it to live in it. That family might need to move to a different, cheaper place (possibly offsetting the housing discount with extra expenses in commuting and transport) or might need to rent and pay money to you instead of investing it in their house. If enough people do the same thing they'll drive prices up in an area, and because they need to recover the investment they'll also put high rent prices, because people need housing and will end up paying increasing rent prices when there's no other option.

> Human rights is a nice buzzword used very loosely and it tends to mean whatever the user considers useful to themself at that moment, I recommend reading some fundamental bills and know what's in it.

I'll just leave you with Article 25, Universal Declaration of Human Rights [1]: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.

1: https://www.un.org/en/about-us/universal-declaration-of-huma...

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

#393

Post by rand49an » Wed, Nov 03, 2021, 9:27 AM UTC

mattmanser wrote: post #374

ojosilva wrote: post #365

Earlier quoted context omitted.

According to analysis from engineers, or Esther from a guy I used to work with who studied break waves for the state transportation board, less cars with larger gaps is better. That's why you see semaphores on highway entering ramps sometimes, ie 101 around SV or certain European big city inner highways. This is a problem that can probably be solved someday with self driving cars collaborating to make highways huge c…

Actually, this is a problem that is already solved by smart motorways in the UK (Europe too maybe?). They have a variable speed limit that dynamically changes according to traffic that stop brake waves happening. Do you not have them in the US?

If my experience with smart motorways is anything to go by they seem to increase brake waves because there are often times that speeds get reduced significantly for arbitrary reasons that not everyone chooses to follow. You then get larger closing speeds which causes people to slam on the brakes.

Additionally the removal of hard shoulders is just dangerous.

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

#394

Post by Ekaros » Wed, Nov 03, 2021, 9:34 AM UTC

oarabbus_ wrote: post #315

trident5000 wrote: post #155

Earlier quoted context omitted.

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.

Your fund managers make their money in short term win or lose. So they really do not have option to just sit on money, but have to look someplace to invest. Even if it doesn't work out in long term.

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

#395

Post by hoseja » Wed, Nov 03, 2021, 9:38 AM UTC

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…

>letting a gap grow in front of me

How do you prevent someone from just filling the gap? If it's large enough to absorb the wave, someone will fill it just out of spite.

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

#396

Post by miked85 » Wed, Nov 03, 2021, 9:45 AM UTC

enlyth wrote: post #164

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.

I'm not saying Z is the cause of the crisis, it's more like them trying to capitalize on it. How bad you view this is based on your political quadrant, so fair enough to those who don't think it's a problem. What I'm trying to bring attention to is that our generation is frustrated, we are priced out of owning a home unless we have some massive help from our parents or inheritance, and being repeatedly told that we w…

> I'm not saying Z is the cause of the crisis

What crisis are you referring to?

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

#397

Post by HPsquared » Wed, Nov 03, 2021, 9:52 AM UTC

qqqwerty wrote: post #72

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…

This is an interesting lesson in algo trading run wild. Roughly, 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. If Zillow was the only iBuyer in a particular market, then that ceiling would likely have held, as all other non-zillow sales would still be operating under the loan approval constr…

They do have a 'natural' ceiling, but with bold enough policy there is no ceiling in practice. Prices could still rise significantly with the use of negative interest rate mortgages (which exist in Europe), or simply direct financial subsidy to buyers (e.g. the UK's "help to buy" scheme), while maintaining reasonable monthly payments.

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

#398

Post by sydthrowaway » Wed, Nov 03, 2021, 10:13 AM UTC

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…

I agree with you. Moments like these are a mask off moment for HN. The North Star of the community is to get rich quick, no matter the cost. Just look at the Who’s Hiring threads, and 90% of them are fly by night SaaS looking to make a quick buck.

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

#399

Post by kavalg » Wed, Nov 03, 2021, 10:17 AM UTC

Pxtl wrote: post #254

enlyth wrote: post #164

Earlier quoted context omitted.

I'm not saying Z is the cause of the crisis, it's more like them trying to capitalize on it. How bad you view this is based on your political quadrant, so fair enough to those who don't think it's a problem. What I'm trying to bring attention to is that our generation is frustrated, we are priced out of owning a home unless we have some massive help from our parents or inheritance, and being repeatedly told that we w…

The "own nothing" wouldn't be so bad if there were massive reasonably priced rental units being built, but that's not a thing either. NIMBYism is killing rental too.

"own nothing" may be good in a competitive market with lots of small players that can't feasibly fix prices and engage in cartels. Reality has not been like that. At least where my sight reaches, every commodity our days is engaged in cartels and (somewhat) regulated.

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

#400

Post by nmca » Wed, Nov 03, 2021, 10:21 AM UTC

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…

You make a common mistake about leveraged bets here in your claim about "gaining nothing".

Suppose house prices evolve from price p0 to price p. The market gains (or loses) p/p0 in that period. If you get a mortgage, you're borrowing money to buy at p0; at any point in time with a price p and total repaid r your total value is given by (deposit + r + p) - p0. You're in negative equity if (deposit + r + p) p0, but note that this isn't multiplying your investment by the market gain. Instead, it's exposing you to the absolute change in price. So suppose (deposit + r) = 40k ; p0 = 145k ; p = 190k. You're in the money for 40k + 190k - 145k = 85k, having invested 40k (roi=2.1). p1/p0 = 1.3 (<2.1), with your leverage (mortgage) having bought you more exposure to house prices. You can then liquify and re-lever back into the housing market, with a larger loan due to you larger deposit (and likely increased income). Historically this has worked very well for people as p has tended to be larger than p0. It does not work well if you end up in negative equity.