ZILLOW...THE EPILOGUE

 At the end of a piece of literature there is an "Epilogue" that brings "Closure". Let's see if closure occurs in the "Fix & Flip" movement.  It appears to have been the case for Zillow.

The error is human nature and the belief that a bunch of wires and semiconductors can replace the greatest computer that has been created...the brain and mind of an individual.

The CEO of Zillow stated in one of the commentaries I read was that they got the formula wrong.  REALLY?   Algorithms are mankind's' answer to the future.  

I thought the Zestimate was wrong from the start when I used it the get values of Estate Properties in Woodside and Portola Valley. They were all under priced.  Land, on which improvements are upon, is the largest part of real estate value.  The structure is only the desire and likes of the individuals occupying the structure.  We humans are unique and our likes and dislikes are as unique as we are.  Initially the Zestimate could not calculate the difference of a 5 acre to a 1 acre property.  The valuation all worked around the size of the house.  I am certain as the data base increased these inequalities all were corrected.  But what was not corrected was the target price of home prices based upon past performance.  That formula is ultimately a failure.  

 In a Shareholder letter dated Tuesday November 2, 2021, Zillow described the "I-Buying"  business as too risky, too volatile, too narrow, and ultimately too low on potential returns to continue.

As Zillow flops does that mean the end of flips?  Opendoor Technologies  and Offerpad continue to buy, fix and flip.  Prior to Zillow's announcement,  Zillow and Opendoor were holding properties 30 days longer than in the past.  Could this be an indication of a market slowing and prices softening creating to narrow of spreads for computer models to find value?

It is not a loss to Zillow as buyers have come to Zillow offering to buy the entire inventory.  Corporate  buyers that buy for their inventory of rental homes across the Nation.  The rental market continues to be a strong and solid, where corporate buyers provide homes for the +36% of Americans who rent rather than own.

A false premiss is to believe that all home prices will decline because Zillow is dumping their inventory.  Looking to buy from Zillow?  Go to Zillow Offers and see if anything is for sale in your area.  My preliminary search came up with nothing in Silicon Valley.  Here are the top markets for Zillow sales: Atlanta 353 homes, Tampa 299 homes, Phoenix 292 homes, Dallas 201  homes, Minneapolis 163 homes, Denver 152 homes, Houston 130 homes, Austin 134 homes, Cincinnati 112 homes, Nashville 95 homes.  Were there not articles from Zillow about the exodus from California and the Bay area to the above locales they have homes for sale?  Is this not a conflict of interest?  Who regulates these real estate firms who promote their expertise only to market from their inventory?  Would not a Stock Brokerage firm be censured and finned for this practice?

"Fundamentally, we have been unable to predict future pricing of homes to a level of accuracy that makes a safe business to be in"...Zillow Chief Executive Officer Rich Barton.  What does that say about Zillow when the others as Opendoor continue to operate under their format?

What does that say about the millions who have sought out Zillow in the last word in real estate values, prices and forecasts?  

Yes, there has been a softening of real estate prices on a National Level.  On a local level there has been some price cuts, under bids.  But for every under bid and price cuts there have been multiple over bids and multiple offers locally.  Our market remain healthy with only over pricing and under pricing corrected by market forces.

Looking to buy?  Interest rates remain at historic lows.  That is the main ingredient of purchasing a home.

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