Posted on 11/01/2021 12:04:56 PM PDT by SaxxonWoods
Shares of Zillow Group Inc. took a dive Monday, after KeyBanc analyst Edward Yruma highlighted how most of the homes the real estate services company purchased, with an aim to flip them, were now worth less than what they paid for them.
The stock Z, -5.48% shed 5.8% in midday trading. Although the stock was still up 13.6% since closing at a 13-month low of $86.00 on Oct. 18, which was the day Zillow said it would stop buying U.S. homes after building a big backlog, the stock was still down 51.1% since closing at a record $199.90 on Feb. 16.
“Zillow may have leaned into home acquisition at the wrong time, and we believe earnings may be at risk due to its current home inventory ($1.17 billion at 2Q21),” Yruma wrote in a note to clients.
Yruma said it completed an analysis of 650 homes in Zillow’s inventory, or about one-fifth of the homes owned, and found that 66% are currently listed below the purchase price at an average discount of 4.5%.
The cities in which the company had the highest percentage of homes that were listed below the purchase price, of the 650 homes Yruma analyzed, were San Diego at 94.3%, Phoenix at 93.4% and Mesa, Ariz. at 92.6%.
The city with the most homes listed below the purchase price was Phoenix
Looks like the people ranting about Zillow and others taking advantage of the market by lowering supply as they bought everything in sight everything in sight were wrong.
Even "experts" like Zillow make mistakes. Also, looking at how many deals they bought spread across various sub-markets, their buying didn't impact pricing or supply enough to notice. If it had, prices wouldn't have dropped, obviously. Buying 50-80 homes in a large metro area is miniscule. I know a guy in South Carolina who bought 12 in and around Myrtle Beach a few years back. Made a killing in equity so far, has them all rented and got paid right through COVID so far.
I sold real estate for almost 30 years. Sept and Oct were almost always the slowest time of year. Buyers with children are highly motivated in August due to school starting soon. August typically gets lots of sales which takes away from Sept numbers and the hangover continues into October, which is the slowest month of the year in almost every business. That's for brick and mortar, internet sales are probably not as impeded by the seasons.
Thank you for the input.
Locally, we saw things red hot in March through June, to ICE COLD now.
One nice place has been on the market since June. In May, two similar homes sold in days.
Zillow sends me monthly emails on the estimated value of my house. It’s always far higher that what I believe the realistic value should be.
Yeah I inherited a run down place in Cleveland that Zillow thought should sell for 77k and I got 30k.
I don’t think they own too many homes, in the grand scheme of things. Never looked into the stock itself, no idea how it is priced. I imagine their bread and butter is selling listings and listing related services, and selling data.
Maybe get revenues up flipping homes, but margins can’t be all that good for an ongoing business even if the houses weren’t underwater.
Even “experts” like Zillow make mistakes.
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Substitute Fauci or Yellen for “Zillow” above.
Ppffttt **** coffee spray on my screen
But realistically, I know I am unlikely to actually get that price in the real market. The last home I sold was about three years ago and I got about $50K less than what Zillow had the house priced for at the time.
Well Zillow worked for me. I was able to sell my home by without using an agent, I was only in the home for 18 months and was able to able break even. If I had to pay the $14K commissions I could not say that.
So I’m a fan of it. Now them buying and selling houses is venturing and I don’t have a dog in that fight.
Certain business activities are best done by individuals and small groups.
A house near me has been on Zillow for almost 90 days. Owner bought the house for around $55K a couple years ago, and is asking almost 2.5 times that now. Not a bad property, but the figure they want is unrealistic. Other properties in the same general area sold quickly, but the asking prices were much more reasonable.
For years I’ve heard people say Zillow’s listing were usually overpriced. Apparently they never heard that rumor and actually bought at what they said. And now we know, the rumors were true.
Isn't Zillow owned by some real estate organization(s)? If so, they're trying to force up home prices because it benefits THEM!
“I got about $50K less than what Zillow had the house priced for at the time.”
And that’s about what Zillow is adding on to what I believe I could actually get.
THANK GOD the city doesn’t use Zillow for property tax purposes.
We’re planning on selling in the Spring. Just for funsies, I asked Zillow for a quote. I stressed in the “application” that we wouldn’t be ready to move until Spring. They offered probably $65,000 more than I thought it was worth...and then took most of that back by wanting to charge a 9.1% fee off the offer. Still, it left us at a decent price point. BUT...this was before they added in repairs and the other gotchas. The house is in great shape...so I expected repairs to be minimal. Their deadline was mid-October. Told them we couldn’t do it...offer expired.
A bennie to selling & buying a home thru Zillow and using their mortgage arm was a 2% rebate plus an additional $1500. Of course, the catch would be the loan rate. If the rate wasn’t attractive, that 2% would be gone in no time.
May try it again when we’re ready in the Spring.
Weren’t other online brokers like Zillow AND Blackrock also buying up supply nationwide and reducing supply?
Are you saying that now they are holding too much property and have to reduce their prices, we will start to see en expansion of supply?
Zillow thinks my house is worth 25% more than I do.
Which is ok. I will get it appraised before sale.
Zillow is the canary in the coal mine for the coming housing price correction.
Zillow underwater? How about all the individual, “owners” who have taken cash out refi loans to values exceeding a crash in the markets? What happens when those folks find themselves underwater?
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