I wouldn't be too quick to claim that the myth of institutional house buying has been dispelled. Zillow isn't the only company out there buying real estate, and they are planning to sell most of the properties to other institutions and landlords, not the open market of owner occupiers.
It appears they made some errors in their calculations and temporarily bought too many houses at too high a price but the article says they are only pausing purchasing for the rest of the year and there's no mention of if they are revising their plan to purchase up to 5,000 homes a month by 2024.
So, looks like without evidence of a market wide cessation or significant long term reduction, significant institutional real estate actors remain a factor in the market.
Agreed. One thing this article doesn't point out that was a bigger topic a couple of weeks prior is that Zillow had to halt purchases due to lack of workers to help flip the homes [1]. The iBuying revenue model depends on the ability to flip a home quickly so that market fluctuations do not have enough time to pose as a risk, which Zillow was willing to take.
I would guess supply chain costs and delays reduced their speed of renovation unexpectedly and they can’t carry the cost of sitting on the property during that wait time. So to your point, it’s likely temporary based on unexpected renovation constraints.
I've never seen any good data that supported the myth of institutional house buying being a big enough phenomenon to affect homeowners.
It was never apparent in the homeownership rate (https://fred.stlouisfed.org/series/RHORUSQ156N) which has been broadly stable for decades, and the jumps over the last few years are, if anything, towards increased homeownership, not less.
It is apparent in the rental listings for single family homes in decent neighborhoods though. A large percentage of listings are from landlords like Invitation Homes, Key Homes, etc.
It appears they made some errors in their calculations and temporarily bought too many houses at too high a price but the article says they are only pausing purchasing for the rest of the year and there's no mention of if they are revising their plan to purchase up to 5,000 homes a month by 2024.
So, looks like without evidence of a market wide cessation or significant long term reduction, significant institutional real estate actors remain a factor in the market.