I'd like to point out that this article neither claims nor provides evidence that Zillow has lost money.
For one thing, as discussed previously[1], Zillow earns commissions and fees when both buying and selling houses, so they may be making money even when the prices nominally show a loss.
For another, even if the majority of the houses were sold at a loss, that statistic by itself tells you nothing about Zillow's overall profit or loss. For example, they might have sold most of the houses for a very small loss, but earned large enough profits on the others to balance those losses out. There simply isn't enough information to say.
They are losing money hand over fist in Tucson. I have several zillow signs in my neighborhood right now. Priced at ridiculous levels and Zillow paid an even more ridiculousness(fitting word play) price to "acquire" the home. Its laughable.
Boots on the ground here telling you the market in the Southwest is jacked up... again. I bought my house in 2009 as a foreclosure and I see the same signs I saw in 2007 all over again. I can't speak for the rest of the country, but Phoenix and Tucson are going to be real estate nightmares in 2022.
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.
I think the simplest way to put it is they FOMOed into a very illiquid asset class in a very high risk market and now need to close the position quickly, which is going to cost them. I’m guessing they see a residential collapse on the near horizon.
Market has slowed a bit in the last few months. Not "prices are dropping" but not "prices will be 10% higher in 6 months" anymore. The margin for error has narrowed.
But selling for more than they paid isn't the idea. The goal is to capture the ~10% of purchase price that is paid out in fees for a real estate transaction.
Particularly if your time horizon is like 3 months. Seems like they’re making two huge mistakes now by selling. Home values will almost certainly rise from here over the next 10+ years, and even the most casual market watcher/Zillow user knows that their “zestimates” are crap, they weren’t going to nail it that precisely. Literally everyone intuitively knows that it was a bad time to buy and now an even worse time to sell… except for the analytics company with all of the data. They should just hold and rent the properties via their app, if they can’t make the math work otherwise.
Certainly rise? IF the market keeps going up nobody will ever be able to afford a home.
Zillow is in the market of fast turn arounds, not holding. The market is already starting to go down. Were in a bubble.
