Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

marketwatch.com

Post reply on HN
Print view View original

431–440 of 476 posts

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

#431

Post by mrow84 »

grayhatter wrote: post #361
aeturnum wrote: post #310

Earlier quoted context omitted.

I think you're confusing the common meaning of rent for "rent seeking"[1] which, in economics, means specifically getting more resources in return for nothing. It's a pejorative definition. Getting paid for a service is not rent seeking in the way people are using it here. [1] https://www.investopedia.com/terms/r/rentseeking.asp

I actually didn't know about the pejorative nature of 'rent seeking', so genuine thanks for the link! IMO I didn't need to either, knowing the commonalty doesn't change the intent I was going for. Even if you're seeking rent above the break even point. I'd still say that's amoral at it it's worse ethically speaking. I mean to expose the hyperbole of the assertion that wanting to wake profit in of itself doesn't make…

I think the point is that there is a structural issue with renting housing, in that most people who rent do not do so for the convenience of renting, but because they cannot afford to purchase. This creates a naturally exploitative relationship between the landlord and renter - the former is not providing a good (e.g. convenience) to the latter, they are holding the good (the housing) and then using the wealth asymmetry to extract rent.

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

#432

Post by seanmcdirmid »

LordDragonfang wrote: post #335
seanmcdirmid wrote: post #325

Earlier quoted context omitted.

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 mo…

Yes, you need capital, or at least good credit. Property management companies are hella expensive, and in this labor market hiring a super is difficult, so...you are going to wind up doing a lot of things on your own, the most important of which is screening tenants to avoid credit risks according to whatever the local laws are that discourage such screening.

No thanks. A lot of people are getting out of it, or finding it is often better to keep a house empty and just record the missing tenant as a loss to write off than risk renting to tenant who is anything but perfect. The future of renting is from big companies who have enough scale and experience to manage the risk. Small-scale private landlords are on the way out.

The immorality of such rent-seeking not with standing, it is just not a very good way to make money unless you are really. diligent or get lucky.

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

#433

Post by beamatronic »

HWR_14 wrote: post #162
yalogin wrote: post #19

Earlier quoted context omitted.

If MBAs and financial models can predict slowdowns, we won't have them at all. If anything ML models will exacerbate the situation IMO and they probably relied on them too much and bought more than they should. Of course what I said is also a projection (without even an ML model), so that is not accurate either :)

The models don't have to predict a slowdown. They just have to account for the total amount of risk Zillow is assuming.

Which should really just boil down to carrying costs vs future expected profits

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

#434

Post by trident5000 »

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.

Where is this data coming from? Thats simply not true. The dot com bubble, housing bubble, crypto bubbles were all retail.

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

#435

Post by alanlammiman »

gravypod wrote: post #47
tppiotrowski wrote: post #14

"The surprising exit, announced with pedestrian quarterly profits, thrashed shares in another rough trading session Tuesday, a day after an analyst said two-thirds of the homes it bought are underwater." https://fred.stlouisfed.org/series/MSPUS The fed chart shows almost hockey stick growth in housing prices this year. How can the Zillow properties be underwater, did they just massively overpay up-front?

I am not an analyst but this is my armchair understanding of the market: 1. The construction of new homes was limited in late 2019 early 2020. This was due to covid and labor shortages and supply lines being blocked. 2. Demand for homes rose to an all time high. The people in big cities said: "Why quarantine with nothing to do in my Manhattan apartment when I can buy a house and sell it when the pandemic is over. Hou…

Yes, Real Estate can be a really flawed inflation hedge, and the relationship between rental yields and interest rates can also deviate sharply from conventional wisdom. Here in Brazil, although inflation is typically in the 4-10% range per year, and although all the rental contracts are tied to inflation indices, you look at homebuilders, REITs, physical real-estate, and nothing has kept up for the last decade. And for as long as I remember, gross rental yields have been lower than the real yields on NTN-Bs - our equivalent of TIPS - which on the face of it doesn't make any sense.

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

#436

Post by AgentOrange1234 »

Slartie wrote: post #384
AgentOrange1234 wrote: post #329

Earlier quoted context omitted.

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.

Scalpers provide liquidity to producers of goods in markets that don't need additional liquidity. For the consumers, he does not provide any liquidity at all. So effectively, scalpers do not provide any "effective" liquidity. Scalpers always buy stuff where there is already high organic demand from actual end users, because scalping only works if demand outstrips supply. This demand is the liquidity the producer of t…

Aha, I was thinking of scalpers like the guy outside the stadium buying and selling tickets from fans, creating a secondary market. I can see how a scalper who swoops in and buys up the original tickets is not doing that.

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

#437

Post by the_du_ »

maest wrote: post #404
hoseja wrote: post #395

Earlier quoted context omitted.

>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.

I sometimes do what the gp said - let a gap grow in front of me if I'm in stop-and-drive traffic and get annoyed when someone selfishly rushes to fill the gap in front of me only to have to break 60 seconds later. On further reflection, that's not necessarily selfishness, more that they don't understand what I am trying to do, but there's no way to communicate complex information car to car on a highway.

I started a job in Fresno in 2013, driving up from LA on Sunday and back down on Friday.

Bluetooth had started to become standard in all cars, and as I was working on a train project, the idea occurred that if we could link all the freeway cars in series, and treat it as one long train, then I would essentially just have to steer, and we all would avoid brake-waves.

One car only needs to be able to talk to the one car in front of and the one car behind itself.

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

#438

Post by stickfigure »

jachee wrote: post #303
stickfigure wrote: post #294

Earlier quoted context omitted.

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

Zillow wasn’t fixing them up, though. They were putting minimal-effort, superficial changes with zero care or actual investment, and then resisting for a higher price. They were scalping housing.

People who flip houses don't put in more money than they need to, that's a tautology. It still adds value to the market.

"Scalping" makes zero sense in this context. Scalping exploits ticket mispricing and asymmetrical access to the market (waiting in line). Houses are bought at auction; you can't "scalp" at an auction. Try it at Christie's sometime.

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

#439

Post by WalterBright »

hoseja wrote: post #395
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…

>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.

Sometimes they would. But most of the time, they didn't.

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

#440

Post by WalterBright »

hallway_monitor wrote: post #418
hoseja wrote: post #395

Earlier quoted context omitted.

>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.

That's what I thought too until I started practicing this. Probably 75% of the time no one comes into the lane. It takes some practice to find the correct gap size. Besides saving your clutch, you can do this type of brake-early maneuver at stoplights. Decelerating early and coasting at a lower speed means you don't have to stop and can increase your gas mileage significantly.

I do it for stop signs, too, so I only have to stop once. Especially if it is uphill.
Post reply on HN