Zillow was betting against 3-6 month future appreciation on real estate only to realize things have cooled down. They were paying premiums for the homes thinking that the demand for housing will stay the way it was and in fact grow more.
Zillow is saying their reasoning for getting out of the house flipping business was due to extreme volatility and shortages with supply/contractors.
It is said that Zillow has a $380 Million adjusted loss from the home buying program. The toughest part is that Zillow gave investors big dreams stating that they expect to generate roughly $20 Billion per year over the next couple of years with this program. When the announcement that the Zillow Offer program is getting shut down the Zillow stock plummeted about 28% in ONE DAY. Shareholders began to panic and fear starting floating.
Things are getting concerning for the housing market because if Zillow starts selling their houses for cheaper then the current market, it will drop those homes within that market. The Zestimates will also start to change on home owners homes. The home values will begin to drop and comparables will start to dip. The story continues!
Tune in to this video as I break down for you my thoughts, what’s going on and how this can effect the housing market in whole.
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