Zillow buys too many houses, now looking to offload 7,000 homes in bulk

[Cal Jeffrey]

In a nutshell: Real estate listing aggregator Zillow reportedly has a housing surplus and wants to bulk-sell up to 7,000 homes. It is looking to recover about $2.8 billion after reportedly buying up too many properties over the summer.

Zillow's primary form of business allows users to search for available housing to rent or purchase. Most people are unaware that the company has a "Homes" division that is essentially a house-flipping business. Its "Zillow Offers" program buys properties for cash up-front, makes renovations, then puts them back on the market for a profit.

Over the summer, several tech companies, including Zillow, snatched up real estate as housing prices in the US began ballooning. In August, Vice reported that the company participated in a housing "arms race" with other tech companies like iBuyers and Opendoor. The company told investors it planned to expand its Homes division into a billion-dollar business and would purchase thousands of homes throughout 2021, despite the company's stock being on a steep downward trend since February.

The housing market slowed down by the end of summer, and Zillow put a freeze on purchases. Last month, it told investors that a labor shortage in construction and renovation was the cause of the halt. However, insiders told Bloomberg that the company is pitching the properties to "institutional investors" in multiple home bundles. It hopes to make at least $2.8 billion from the sale of around 7,000 homes, estimated to be around seven-eighths of the properties it acquired in Q3 2021.

It remains unclear if the bulk sales will result in an overall profit or loss. According to Zillow, the current home value index is $308,220. The average asking price of the bundles would be $400,000 per unit. That's a markup of nearly 30 percent. However, there is no guarantee that Zillow will recoup as much as it hopes. With real estate investors becoming bearish, it is unlikely the company will get its initial asking prices for the bundles.

KeyBanc Capital Markets reported that an analysis of 650 Zillow-owned properties showed the Homes division listed two-thirds at an asking price lower than what the company paid.

"I think they leaned into home-price appreciation at exactly the wrong moment," KeyBanc analyst Ed Yruma told Bloomberg.

YipitData analysts noted that the company put a record number of homes on sale in September with the lowest markups since 2018. Additionally, Zillow reduced the prices on nearly half of the properties it listed in the third quarter. The analysts speculate a surplus is forcing Zillow to ask for less.

Image credit: Binyamin Mellish

Permalink to story.

https://www.techspot.com/news/92044-zillow-reportedly-looking-offload-7000-homes-bulk.html

 

[QuantumPhysics]

This is a free market.

Private businesses have every right to buy what they can "afford" to buy.

But when you have a Federal Reserve keeping interest rates at basically 0% and 30 year fixed mortgages for less than the cost of inflation, and factor in the profitability of real estate speculation due to websites like Zillow, Air BnB, etc...

this is the logical conclusion.

Speculation leads to overleveraging which has driven the price of the median home past $400,000 and has led to a housing shortage with a rent skyrocketing.

I say: "let the free market work".

Let Zillow lose money and readjust the prices of the homes lower till the market will bear those prices.

No bailouts.

No help.

Those potential buyers who saved up and are waiting for the market to crash will come in and buy where property makes sense.

"EVERY Bubble eventually finds a pin".

 

[Dimitriid]

Hey tech or not if you want to know why your rent is so ridiculous is making most of you 'millennials' and 'zoomers' basically unable to get out of debt or own property, it's because of ridiculous stories like this: don't listen to the memes 50+ years ago when Boomers bought their houses not only did they made a lot more money for far less skilled jobs comparatively, but they were given tons of incredibly subsidized mortgage loans to do so (Well, if they were of the correct racial background that is but I digress)

Now most people that don't own a house are forced to move into "tiny houses" which is basically just gentrified trailer parks but just as tiny and just as unreasonably difficult to live day-to-day.

 

[Puiu]

House scalping

 

[Raytrace3D]

Zillow's home value estimates are hilariously over inflated as compared to say, Realtor.com. I had my home appraised last year and the Realtor.com estimate was dead even with my appraised value where as Zillow said my house was 22% higher in value than that of Realtors. If only...

 

[Tantor]

Hey tech or not if you want to know why your rent is so ridiculous is making most of you 'millennials' and 'zoomers' basically unable to get out of debt or own property, it's because of ridiculous stories like this: don't listen to the memes 50+ years ago when Boomers bought their houses not only did they made a lot more money for far less skilled jobs comparatively, but they were given tons of incredibly subsidized mortgage loans to do so (Well, if they were of the correct racial background that is but I digress)

Now most people that don't own a house are forced to move into "tiny houses" which is basically just gentrified trailer parks but just as tiny and just as unreasonably difficult to live day-to-day.

Yep. Do not believe everything you hear about Boomers having it so much easier back in the 1970's and 80's.

Early 1970's interest rates were HUGELY higher than now, reaching almost 20%. Try buying a house with that.

I don't recall that jobs were any less demanding or less skilled. Engineering in the 1970's was done with slide rules, no computers or calculators. Cars broke down far more often, most guys had to learn about carburetors, tires, transmissions. Travelling required people to read maps. If you got lost there was no convenient cellphone gps. I went through a 4 year machinist apprenticeship. The mechanical drawing classes were brutal: 3d rotations, projections, internal views, etc. Same with the math. Engineering school was the same. There was great emphasis on skill and self sufficiency.

And no, we did not make more money. Income has remained relatively flat since the 1970's so it's about the same.

However, since then, things have gotten FAR worse in other ways. The hatred and discrimination against Traditional Americans has gone off the charts. In the 1970's there was a sense of unity and belonging. Now it's the opposite. You can't hardly read a headline without veiled references to the evil Traditional Americans, especially males. The Covid lockdowns are destroying so much. There is no future.

 

[captaincranky]

Could there be anything possibly more rewarding, than watching those vultures fly into the side of a cliff?

 

[wiyosaya]

Looks like Zillow contributed to a problem of their own making.

Yep. Do not believe everything you hear about Boomers having it so much easier back in the 1970's and 80's.

Early 1970's interest rates were HUGELY higher than now, reaching almost 20%. Try buying a house with that.

I don't recall that jobs were any less demanding or less skilled. Engineering in the 1970's was done with slide rules, no computers or calculators. Cars broke down far more often, most guys had to learn about carburetors, tires, transmissions. Travelling required people to read maps. If you got lost there was no convenient cellphone gps. I went through a 4 year machinist apprenticeship. The mechanical drawing classes were brutal: 3d rotations, projections, internal views, etc. Same with the math. Engineering school was the same. There was great emphasis on skill and self sufficiency.

And no, we did not make more money. Income has remained relatively flat since the 1970's so it's about the same.

However, since then, things have gotten FAR worse in other ways. The hatred and discrimination against Traditional Americans has gone off the charts. In the 1970's there was a sense of unity and belonging. Now it's the opposite. You can't hardly read a headline without veiled references to the evil Traditional Americans, especially males. The Covid lockdowns are destroying so much. There is no future.

If you assume that there is no hope, you guarantee that there will be no hope. If you assume that there is an instinct for freedom, that there are opportunities to change things, then there is a possibility that you can contribute to making a better world.

Noam Chomsky https://www.goodreads.com/quotes/112259-if-you-assume-that-there-is-no-hope-you-guarantee

 

[Bulllee]

House scalping

He said it!

 

[kiwigraeme]

Yep. Do not believe everything you hear about Boomers having it so much easier back in the 1970's and 80's.

Early 1970's interest rates were HUGELY higher than now, reaching almost 20%. Try buying a house with that.

I don't recall that jobs were any less demanding or less skilled. Engineering in the 1970's was done with slide rules, no computers or calculators. Cars broke down far more often, most guys had to learn about carburetors, tires, transmissions. Travelling required people to read maps. If you got lost there was no convenient cellphone gps. I went through a 4 year machinist apprenticeship. The mechanical drawing classes were brutal: 3d rotations, projections, internal views, etc. Same with the math. Engineering school was the same. There was great emphasis on skill and self sufficiency.

And no, we did not make more money. Income has remained relatively flat since the 1970's so it's about the same.

However, since then, things have gotten FAR worse in other ways. The hatred and discrimination against Traditional Americans has gone off the charts. In the 1970's there was a sense of unity and belonging. Now it's the opposite. You can't hardly read a headline without veiled references to the evil Traditional Americans, especially males. The Covid lockdowns are destroying so much. There is no future.

Some good points there. We each have our own battles . 70s had oil crisis ,cold war. manufacturing shake up - but it did seem a more carefree world .
Less people worrying about clothes, appearance and all that- work day finished forget about it - no emails, phone calls .

Maybe take a lesson from Traditional Americans - they can been called savages, godless pagans ( an oxymoron ) , wife beaters, alcoholics , lazy , diabetic , they have land stolen endlessly , treated as terrorist . ( read "Bury my Heart in Wounded Knee " - it uses white man's evidence - congress reports etc
Their world can't be solved by throwing money and baubles - hasn't worked that well in The USA, Canada, Australia, NZ etc - money can help.

It has to come within -concentrate on your own values , take pride in doing
Do you really care what a Woke person says ?
Also have self honesty - and reflect on changes - that were right .
Eg In early 19th century a women's place was to become a wife/mother uncomplaining , always smiling & feminine no matter how bad the husband was .
You wouldn't want your daughters now to marry such a person.
Back then "don't shame the family " "it's your fault he cheats"

Look life is not fair - but being born in America or NZ - it's already in our favour .

It's like the good message from Christianity - if you want people to find Christ and the Lord - lead a like of kindness and following the commandments and Jesus' guidelines .
I'm agnostic - but there is nothing wrong with that advice

 

[Bulllee]

He still said it kiwigrame.

 

[Cycloid Torus]

2007? 1988? 1978? 1971? It's the cycle, baby..

 

[Theinsanegamer]

This is a free market.

Private businesses have every right to buy what they can "afford" to buy.

But when you have a Federal Reserve keeping interest rates at basically 0% and 30 year fixed mortgages for less than the cost of inflation, and factor in the profitability of real estate speculation due to websites like Zillow, Air BnB, etc...

this is the logical conclusion.

Speculation leads to overleveraging which has driven the price of the median home past $400,000 and has led to a housing shortage with a rent skyrocketing.

I say: "let the free market work".

Let Zillow lose money and readjust the prices of the homes lower till the market will bear those prices.

No bailouts.

No help.

Those potential buyers who saved up and are waiting for the market to crash will come in and buy where property makes sense.

"EVERY Bubble eventually finds a pin".

We should have let the banks collapse in 2008.

Hey tech or not if you want to know why your rent is so ridiculous is making most of you 'millennials' and 'zoomers' basically unable to get out of debt or own property, it's because of ridiculous stories like this: don't listen to the memes 50+ years ago when Boomers bought their houses not only did they made a lot more money for far less skilled jobs comparatively, but they were given tons of incredibly subsidized mortgage loans to do so (Well, if they were of the correct racial background that is but I digress)

Now most people that don't own a house are forced to move into "tiny houses" which is basically just gentrified trailer parks but just as tiny and just as unreasonably difficult to live day-to-day.

I guess those of us that are responsible with their money, save, and can buy a house in their early 20s just dont exist then?

There are plenty of possibilities out there if you are not a financial m0r0n. Stop spending 100k on gender studies degrees, stop buying the latest iphone, eating out every day, and drinking starbucks every day, and like a miracle in a few years owning a home is within reach. Most of the millenials who are "too poor" to achive in life what their parents and grandparents did that I've met have been either too lazy or stupid to buckle down and do the work their predecessors did. They refuse to work overtime, save money, stop eating out.

When my grandfather was raising kids, he worked 12 hours a day at the local plastics factory in the winter, and did 3rd shift on the railroad the rest of the year. They drove beaters, ate potatoes and hot dogs most nights, and wore gently used clothing that was taken care of, because you only had 2-3 set of clothes. Where was his white boomer privilege? Right, it didnt exist for the vast majority of boomers, the "golden times" are rose tinted hallucinations by gen Xers and millenials sad they couldnt live the dream life, completely unaware of the work that went into those cushy jobs their parents had in old age.

Boomers made it work with 20% interest rates, cars that lasted 3 years, no AC, no mobile phones, no internet, no fast food, working 12 hours a day in factories. When boomers were having kids in the 70s the purchasing power of americans was decreasing by the day, we didnt pass the 1972 peak in purchasing power until 2019. If you cant make it today working 8 hours with excel spreadsheets, with 3% interest rates and the world's knowledge at your fingertips, you're doing something very, very wrong.

 

[scavengerspc]

Just wait for a year or so when Zillow has another round of taxes coming due.
Then make an offer on a house. Or 5.

 

[Uncle Al]

Could there be anything possibly more rewarding, than watching those vultures fly into the side of a cliff?

yeah ..... fly into a snow plow ..... cuts down on the survivors by a great margin!

 

[hazphan]

A Business shouldn't be able to buy a single family home. A Single family home should be reserved for single families to buy a home.

 

[Puiu]

Yep. Do not believe everything you hear about Boomers having it so much easier back in the 1970's and 80's.

Early 1970's interest rates were HUGELY higher than now, reaching almost 20%. Try buying a house with that.

I don't recall that jobs were any less demanding or less skilled. Engineering in the 1970's was done with slide rules, no computers or calculators. Cars broke down far more often, most guys had to learn about carburetors, tires, transmissions. Travelling required people to read maps. If you got lost there was no convenient cellphone gps. I went through a 4 year machinist apprenticeship. The mechanical drawing classes were brutal: 3d rotations, projections, internal views, etc. Same with the math. Engineering school was the same. There was great emphasis on skill and self sufficiency.

And no, we did not make more money. Income has remained relatively flat since the 1970's so it's about the same.

However, since then, things have gotten FAR worse in other ways. The hatred and discrimination against Traditional Americans has gone off the charts. In the 1970's there was a sense of unity and belonging. Now it's the opposite. You can't hardly read a headline without veiled references to the evil Traditional Americans, especially males. The Covid lockdowns are destroying so much. There is no future.

also for @Theinsanegamer

Let me put it in simple numbers even though I'm not from the US.

In the 70's the median household income was $8734 with the median house value being $17000 (rent at $108). Mortgage fluctuated between 7 to 11% (official numbers).

in 2010 the the numbers were $49445 and $221,800 ($900). I'm too lazy to check for 2020 numbers, but as far as I know they're even worse than 2010.

Ignoring the sky high collage debts of today that didn't exist back then, just by income alone, it's literally 4 to 5 times harder to buy a home today. Income just didn't keep pace with the rising prices of homes (it's not just something limited to the US, I had the same issue when I bought my apartment last year).

Besides the lower prices of homes, there were many federal programs that helped with homeownership during the housing booms of 50s, 60s and 70s (especially suburban houses). The mortgage subsidies were very important during that period of time (they lowered the average age of buyers sharply).

 

[Avenger001]

Maybe we stop treating housing as a commodity....

 

[m3diapers]

I hope the market crashes soon

 

[Fox God Records]

Zillow's home value estimates are hilariously over inflated as compared to say, Realtor.com. I had my home appraised last year and the Realtor.com estimate was dead even with my appraised value where as Zillow said my house was 22% higher in value than that of Realtors. If only...

We sold my mother's house earlier this year, just as the lockdowns were starting. She sold it to one of those "We Buy Ugly Houses" flippers. They paid my mom $50,000+/- more than she owed, and she thought she was under water (she was, actually). The Ugly Houses people came in, did a little lipstick and duct tape and sold the house within three months of taking the keys. They asked for $60,000 more than they paid my mother, and they got $80,000 more. Someone paid OVER the asking price. The same thing happened to my aunt at about the same time. She was asking $250,000 for a rural property and she ended up getting $325,000 in about 2 months.

Now, here's the real kicker, Zillow was listing both properties way over the asking prices, but they damn near nailed the sales prices.

 

[Raytrace3D]

Now, here's the real kicker, Zillow was listing both properties way over the asking prices, but they damn near nailed the sales prices.

Dang!

 

[gmdsr]

Hey tech or not if you want to know why your rent is so ridiculous is making most of you 'millennials' and 'zoomers' basically unable to get out of debt or own property, it's because of ridiculous stories like this: don't listen to the memes 50+ years ago when Boomers bought their houses not only did they made a lot more money for far less skilled jobs comparatively, but they were given tons of incredibly subsidized mortgage loans to do so (Well, if they were of the correct racial background that is but I digress)

Now most people that don't own a house are forced to move into "tiny houses" which is basically just gentrified trailer parks but just as tiny and just as unreasonably difficult to live day-to-day.

You are so WRONG it's almost criminal....NO, there was not money being given away or heavily being subsidized. Guess you weren't around when mortgages were 16% and the claim was that they would never see single digits again. If wages back then were so high, Why is there a movement looking to get unskilled labor $15 dollars an hour. Maybe if you get a trade, or a degree that pays well instead of one that's useless you would know better than to write uninformed comments....The Truth is Out There, but you have to look for it! It's called EDUCATION....Let's not forget, you get what you vote for!

 

[Puiu]

You are so WRONG it's almost criminal....NO, there was not money being given away or heavily being subsidized. Guess you weren't around when mortgages were 16% and the claim was that they would never see single digits again. If wages back then were so high, Why is there a movement looking to get unskilled labor $15 dollars an hour. Maybe if you get a trade, or a degree that pays well instead of one that's useless you would know better than to write uninformed comments....The Truth is Out There, but you have to look for it! It's called EDUCATION....Let's not forget, you get what you vote for!

Want me to prove to you that they were indeed benefiting from subsidies? I can just link you one of the many papers written on this topic or one of the many articles online that talk about it. (ever heard of FHA, VA or HOLC backed loans)

How about reading my previous comment? https://www.techspot.com/community/...fload-7-000-homes-in-bulk.272008/post-1925674

 

[Danny101]

Even in a capitalist society., something just seems off and wrong with Zillow being able to do this. Shouldn't there be a Glass-Steagle principle applied to this?

 

[SixTymes]

Anyone with half a brain knows this means one of two things, either the ceo and decision making managers are all stupid, or, this is stock manipulation. (people they know bought puts)