Zillow's stock data trend has relations with market trends. With current state of Zillow stock kinda indicates it's beginning of real estate market crash. Any insights, links, inside information?
Zillow paid asking for properties and did light remodels and expected returns. Keep grinding and getting deals for real BRRRs or flips knowing your area and you will still make money. If values start dropping. Add that trend to your numbers. If things really implode. Throw a handful if pennies and hit 30 deals
For those who are not overleveraged, a crash won't have much of an impact. Rents could come down making housing more affordable. For those holding cash, a crash is an opportunity. The question is, how do we get to a crash when we have a significant inventory shortage?
I had gotten an offer on my personal home from zillow which was many 10's of thousands higher than opendoor and my real estate agents estimate. It seems as if zillow was going in very high just to get some assets and completely disregarded the little known fact that you still have to sell properties for more than you by them.
The really sad part is mu wife decided not to sell the property so no over inflated price for me.
Last 3 years they have been losing money on almost every house. And the short term result was their stock doubled. Hmm cheap money and a tech based algorithm and a failed attempt to disrupt an entrenched business model. Many have tried most have failed. Not that that business model should not be disrupted its just so much harder then anyone expects. just ask purple bricks or any FSBO etc. Real estate is stubbornly old school and zillow wants to be tech new school and hugely difficult to scale at any level.
Zillow had the ire of agents for years. The bigger question is how can the #1 real estate site [90% of all real estate traffic] can not make this work. News flash they are unloading the unprofitable business [low margin, high cost of assets, management and high closing costs on the other side] in favor of the sweet spot selling leads to agents and now that they are full on a brokerage that is the secret weapon they are holding - they are getting lots of traction here and this will be their silver lining. Look out agents they are going to double down and they want to own the entire process [flipping business was a small hiccup enroute to their real estate domination] from brokerages, lending and various other affiliated services ie; title, warranties , insurance etc. make those higher margins more emphasized and more efficient they will be a force to reckon with. We shall see!
On a market note - negative news sells so we got alot of it this last week. The market needs to slow down to have any kind of sustainability and common sense. How far will all this unlimited liquidity will last? 2008 was an extreme lack of liquidity, 2021 is the exact fundamental opposite and who knows the unintended consequences to come with that. My guess is long term higher inflation and with interest rates held at sub 4% over the next 3-8 years could see prices double. Who knows, but I do know real estate is going to be the most likely hedge against anything coming or as any alternative. Id sure rather double down on another property than Tesla or Doge coin that is for sure.
To clarify, you believe that Zillow's stock price and the real estate market are correlated. Then because Zillow's stock price has dropped, thus prices in Real Estate must?
Which part of the market does Zillow's stock price correlate with? Residential, Multi Family, light Industrial, city office, life science? Also, which MSA have more of a relationship than others?
since correlation doesn't equal causality, what links the two?
Exactly. ZG managed to lose about $540,000,000 buying and owning houses since 2018, the largest run up in real estate values in history. A lesson to us all to not to over-pay.
Bloomberg and others wrote articles stating Zillow's inventory of homes is about 7,000. They are looking for an institutional buyer at $2.8B.
We don't know where all these houses are (I gather a lot are in Phoenix) or what % is market-ready, etc but most likely a hedge fund will buy them in one shot with the goal most likely to hold and rent out 90% or whatever of them. Higher end retail houses have certainly not been my target to hold as rentals.
So it's doubtful the overall housing market is going to be flooded with inventory. Specific markets Z did a lot of buying in may see a bunch of new rental inventory with corporate landlords. Possibly not good for landlords in those specific markets depending on rental demand.
7k house unless concentrated all in one market is just a dimple on a pimple LOL.. this is a failed exercise by Zillow.. And absolutely its common knowledge you make money in a few ways in RE.. When you buy ( get a good to decent deal or value add) organic appreciation ( which zillow has not owned them long enough to see much of a run since they paid tippy top of market. and then if they are rentals then you have cash flow tax bene's and debt paydown by others.. no big mystery here.. Buy high sell low is a corner stone of investing in America look at the stock market..
It is Zillow that crashed and burned, not the market. ;-)
One of my favorite quotes is: "If you can't make money when the market is at an all time high, when do you expect to?" Same with the stock market.
@Amey Phatale in my area we still have really low inventory and buyers still wanting houses. My wife is a realtor and listed a house the other day. It was the same as ever, 12 showings on the first day 8 offers and contract in hand by the weekend. As long as there’s a demand and a shortage of houses then there’ll be no crash. Just a stalled market.
@Amey Phatale Hello Everyone! …when you get a chance google Ivy Zelman. Ivy has her own firm on Wall
street and specializes in the home industry (Zelman and Associates). She’s one of the only ones that nailed the housing crash in the 2000’s. She’s a brilliant women and knows the industry inside out. Good reads and you will pick up so knowledge along the way.
@Dave E.you got it. Zillow paid way too much for homes and pretty much has boneheads running this division. That’s why there letting go 2000 people and getting out of the flipping business. Huge losses.
Zillow is also trying to sell their inventory privately to other institutional buyers, so it's not even like a wave of listings is hitting the MLS in all of the areas Z was buying in. It's just more inventory for Blackrock to buy off-market.
Zillow's stock data trend has relations with market trends. With current state of Zillow stock kinda indicates it's beginning of real estate market crash. Any insights, links, inside information?
Zillow's data also said they should flip houses lol
What is the future of the the other Ibuyers? If I were to bet, they are going to run out of money as well. They have portrayed the Zillow failure as good for them. I don't see the the Ibuyers' VC's continuing to pour money into a model that is not working. Scaling fix and flip nationally is a cool idea. They have same problems we all do. Finding good deals, debt service labor material and so on. Except on a national scale.
Is there going to be a crash, YES. When is anyones guess? In the words of Jim Morrison, "no one gets out alive". On a long enough time frame, all markets crash. The markets' assent is unstainable it, will, could, maybe, absolutley, continue up or soften. At this moment any forecast is a good as the next. If someone asked you five years ago, where will you be today, there is no possibilty you had a reasonale answer.
@Amey Phatale not sure how you are making a connection. Zillow’s trouble are Zillow’s troubles. They are one single private company, a company in trouble. One company’s issues don’t translate into troubles for the entire industry.
We are still seeing low inventory and low interest rates - both of these are main indicators for where the market is heading. Zillow is not a large mover in the real estate market
My opinion, fwiw, is that small LLs that self manage and that care about their portfolio and their tenants wont be affected too much, if at all, by a bunch of zillow homes ending up as rentals managed by a soulless PM.
I say this as there is a chunk of the population that looks for what small LLs provide- excellent customer service, well run rentals, texts and phone calls that are answered in less than 24hrs etc.
on the other hand we do need more affordable housing - and I hope that this zillow debacle does not hurt all those folks looking for something they can afford.
Their ibuying program relied heavily on their Zestimates in the algorithm and look where it got them. Pretty ironic, I think. A long hard look at how they factor it and bringing it down to reality would definitely be a good thing.
Zillow is having big Company problems....no so easy to "wholesale" it is local, local not a job you can do from your desktop. Now they have losses..yes!
Market crash --again Real Estate is local, In my area, Central FL --we are not as hot as it was a few months ago, but a soft landing or leveling of pricing is happening especially in $ 500,000 and higher.
We have climate change, shifts of large populations, shortage of water, Covid, high demand for housing.
@Timothy Hero. You last statement is very interesting. "People involved in the crash of 2008 are very fearful". That may be true for the people who over extended themselves with mortgage debt, bought at the top of the market hoping to make a quick profit, etc. Real Estate is a cyclical market and always will go thru a correction, maybe not as drastic or as frequent as stocks. I would say within 10 years we will see a major correction, and those small investors who are buying high and holding multiple mortgages indeed should be fearful. Big companies doing foolish things like Zillow, it's just a game of monopoly.
Since Zillow is in the real estate business, the stock price does move up and down with the overall housing market. A strong housing market is arguably good for Zillow and a weak market is bad. That being said, more than one factor affects a stock price. In this case it is Zillows failed attempt to enter the flipping market and their expected loss on selling off the houses.
@Timothy Hero. You last statement is very interesting. "People involved in the crash of 2008 are very fearful". That may be true for the people who over extended themselves with mortgage debt, bought at the top of the market hoping to make a quick profit, etc. Real Estate is a cyclical market and always will go thru a correction, maybe not as drastic or as frequent as stocks. I would say within 10 years we will see a major correction, and those small investors who are buying high and holding multiple mortgages indeed should be fearful. Big companies doing foolish things like Zillow, it's just a game of monopoly.
I agree and respect your statement of "within 10 years". I get tired of the doom and gloom people who have been claiming we're weeks away. We've been hearing it since 2017.
Zillow being morons isn't going to be the cause of the next market correction, whenever it comes. They thought they built an algorithm that could play both sides of the real estate transaction and be successful doing so on very small margins. Looks like they didn't get it right.