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Zillow seeks to sell 7k homes for $2.8B after flipping halt

bloomberg.com

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Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#51

Post by barbazoo »

PragmaticPulp wrote: post #20
ineedasername wrote: post #7

Earlier quoted context omitted.

Unfortunately, at an average price of about $400,000 most of them are not going to be affordable for a typical young first-time buyer.

Not really. Mortgage rates are so low that even with only 5% down the monthly mortgage payments on a $400K house are similar to what someone would be paying for monthly rent in these cities. Mortgage rates are incredibly low and there are a number of options to reduce down payment requirements right now. Meanwhile, wages are up and better paying jobs are more common for young people. $400K isn’t out of reach at all f…

But will they stay low for the next 30 years? Probably not. It's not a good idea to justify ones house buying decision with an all time low interest rate.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#52

Post by webinvest »

silisili wrote: post #29
wayoutthere wrote: post #8

Earlier quoted context omitted.

There is plenty of idle money in the investment world that needs places to go, unfortunately. Homebuyers are still being priced out by institutional investors looking to be long-term landlords. The market consensus right now is that inflation is here to stay for the next decade and bond prices aren’t adjusting accordingly, so there’s a flood of cash into all asset classes to try to hedge.

Sorry if this is a stupid question/thought... but wouldn't a mass run to asset classes itself cause inflation? Like some self fulfilling prophecy?

Yes!

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#53

Post by ISL »

cletus wrote: post #15

This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…

As I understand things, Zillow's approach wasn't a corner, but rather an attempt at arbitrage/value-creation. They were pretty sure they had an edge at price-estimation and had enough capital to be able to simultaneously offer sellers execution speed and offer buyers a price they would accept. It is a market-making play.

My impression here is that Zillow has re-evaluated some part of that calculus and decided to pull back. I hope that they'll be able to retool and revisit the approach after learning expensive lessons, as it is my impression that there should be real value here for all concerned.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#54

Post by rayiner »

Classic example of not understanding the gap between theory and application. If your home is overvalued by Zillow, you’re much more likely to sell than if it’s valued correctly or undervalued. E.g. Zillow overvalues my house because it’s algorithm can’t factor in our weird parking situation. I’m much more likely to want to sell for a high valuation than someone whose house is valued correctly by the algorithm.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#55

Post by ClumsyPilot »

sremani wrote: post #11
wayoutthere wrote: post #6

Turns out that mass flipping houses doesn’t work when you can’t hire contractors to do the work for a price that makes your budget assumptions hold. I am disappointed that they’re looking to offload them to institutional investors rather than individuals. Housing should probably not be an investment vehicle, but here we are.

Projected population of US in 2050 is 458 million from the current 330 million. Given that underlying reality, housing is going to be an investment.

They are gonna need cars and furniture, yet those are not an investment.

Is USA running out of land, or Timber, or unemployed people that could be employed to build a house?

We need to get institutional 'investment' out if house flipping and fix zoning.

https://youtu.be/CCOdQsZa15o

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#56

Post by Kalium »

axxl wrote: post #4

I can't read the original article, but this appears to be an identical article at least from the start: https://www.eastbaytimes.com/2021/11/02/zillow-to-sell-7000-... I don't know which is the original and which is the copy. Edit: It seems like they are both sites owned by the same company? But one has a more aggressive paywall? I don't know. The schadenfreude is real for me seeing this. A company like Zillow gettin…

> The schadenfreude is real for me seeing this. A company like Zillow getting into flipping seems questionable to me. The customers are no longer aligned with the company on goals with something like this. It's like when the realtor offers to buy your house... they obviously feel like they can make more than you, when they're supposed to represent you!

I've personally dealt with selling real estate within the past calendar year. Having someone willing to offer me an option highly likely to close quickly at a small discount to the prospective market rate would have been a pretty attractive option. Otherwise it can take months upon months to close a sale. Months in which I'd really like to have that money and perhaps be thousands of miles away.

Do they think they can make more money than me? I have no doubt. Am I as patient or able to invest as a business much larger than me? Probably not. The real estate market is not always a particularly liquid or quick one to operate in.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#57

Post by bedhead »

The business of iBuying is destined for the trash heap, its future so seemingly inevitable that I'm shocked anyone alive considers this a viable business with a real terminal value. Did we not learn real fast back in 08 that the financialization of people's homes is basically a non-starter? Being a glorified payday lender with people's homes is never going anywhere. It's one big Catch 22, if these companies ever even figure out how to make money from this (and so far they can't) they will inevitably just get shut down by local governments, which has already begun in Europe.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#58

Post by whimsicalism »

giantg2 wrote: post #35
zip1234 wrote: post #10

Earlier quoted context omitted.

They are not the problem with residential real estate prices. The real problem is people that prevent additional housing from being built.

"The real problem is people that prevent additional housing from being built." If you go deeper, it's about personal preferences and distribution of jobs. There are plenty of areas that allow houses to be built and have affordable houses. Many of those places may have limited job choices, although remote is becoming bigger. If companies didn't cluster as much, then overpopulation or constrained resources in specific…

It's pretty obvious that there are large returns to density. This has been repeatedly studied.

This is why people move to cities and why employers move to cities.

As more people are brought into the world, those cities will get larger. Effectively prohibiting construction is a ridiculously stupid policy

> Nothing wrong with people in a community wanting to set standards for their area.

There certainly can be. I don't buy this perspective of extreme local control - it obviously can't apply for everything, and housing is one of the things it shouldn't apply to.

It's also not just about "personal preference" - building more housing in these areas would be societally welfare improving. That is more than just my preference.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#59

Post by maxlamb »

johnnyApplePRNG wrote: post #24

How on earth did a real estate analytics company lose money buying and selling homes in THIS market?

Seriously, that is the real question. Considering almost every other recent buyer in the U.S. has made money (on paper) on their property without having done any analysis.
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