Hat tip to Eddie89 for sending in this article on the prospects of Zillow’s ibuyer program, which looked a little sketchy to me too until it was divulged that these ibuyers are primarily in it to make the fee income, and if they can make a profit by selling the houses for more it will be icing on the cake:
Steve Eisman, an investor known for his correct bet against subprime mortgages a decade ago, told Bloomberg News that he’s taken a position against Zillow Group Inc. ZG, -7.08% calling its new venture into selling houses “a terrible business.”
That Zillow venture, then called “Instant Offers,” was announced in April, to mixed analyst reviews. “We are big fans of this pivot,” said Stephens’ John Campbell at the time. A few weeks later, RBC Capital downgraded the stock, saying the shift into what is now called Zillow Offers set the company up for a “transition year” even as the stock remained overvalued.
In response to a request for comment on Eisman’s remarks, a Zillow spokeswoman emailed, “we think Zillow Offers is an attractive service for sellers in all types of housing markets. In a slower market, our offer might seem even more attractive to a seller.” Zillow shares, which had been up more than 50% for the year to date, tumbled nearly 7% after Eisman’s appearance.
Link to ArticleIf Steve wants another reason, he should consider how realtors react to change in the market. Yesterday, I saw an agent in a private realtor Facebook group ask for alternatives to the Zillow advertising he has been doing, which is exceedingly expensive. Historically, the minute the market turns, realtors stop spending money, and I think that time is here.
Time to panic? No.
Buyers are only buying homes that are the right fit.
Sellers just need to do more to spruce them up in advance, hire a better realtor, and be sharper on price and they won’t have any trouble selling their home. Lean and mean. Call it the ‘no fat’ program.
I’m not in the system yet, but you can examine your 1Q stats by plugging in your zip code about half way down here:
https://www.compass.com/market-insights/
The number of sales is your key indicator.
We saw that the NSDCC sales for May and June were -20%, YoY, but the first half of July, 2018 had the same number of sales as last year, suggesting that sellers had been holding out, but those who want/need to sell are getting realistic quickly.
They won’t give it away, but the hope of getting that dreamy +5% over market has passed.
2Q18 Detached-Home Sales, year-over-year:
San Diego County: -8%
NSDCC: -14%
If you’re not sharp on price, you’re not selling. But based on these, most sellers are close enough to keep the number of sales within range.
There will be those buyers and agents who didn’t get the memo and still dive in too quickly for the somewhat-inferior homes.
This will keep the pundits saying, ‘it’s too early to tell’.
If you see Zillow revenue dropping, then you know agents are feeling it.
I had employees who could not afford to buy a house, yet they purchased multiple homes and often collected checks at closing. If you paid people to buy homes regardless of income, how many homes would you sell and what would the price action be? The last boom answered those questions. Everything and anything sold at prices that took the stairs up and the elevator down. The question now seems to be: In a market with rational lending but prices stretching the affordability index, what will the price action be?
Stagnant City because buyers would expect more but sellers won’t beleve their price is wrong for months or years.
It takes motivated sellers willing to sell for what the market will bear to find the true values.