Zillow can't handle the heat! Another Canary.
Zillow has suspended its iBuying program, Zillow Offers, cited building backlogs and labor/supply shortages as the reason. I believe Zillow's actions supports the idea of a weakening housing market. Weakness in the housing market is attributed to dampening economic conditions.
Zillow's iBuying program started in April 2018 and represented the newest frontier in real estate technology. Zillow previously made money from online advertisements and providing leads to agents. iBuying stands for Instant Buying. Zillow commands a huge amount of data which, allows them to use algorithms to automate the home buying process. This iBuying program quickly turned into Zillows biggest source of revenue and led to countless valuation upgrades. This is not surprising in an environment where: year over year home price appreciation and prices adjusted for inflation are at its highest levels ever. From starting the program in April 2018 to the peak in 2021 was a 600% move. So why would Zillow get rid of their most successful and profitable business?
I don't believe Zillow is stopping because of operational capacity. Zillow's data regarding the housing market is as good as the US Government's; they can manage their inventory and new purchases without having to stop the program. Why not just slow it down temporarily. I think this has more to do than labor and material shortages. Maybe they see trouble on the horizon and houses are not the asset you want to hold especially if you bought it at the top. Q3 and Q4 are going to be horrible earning seasons for them. They want to get out before, things get even worse.
Now that interest rates are increasing, moratoriums expiring and the normalization of lumber prices all lead to lower housing costs. You can see the problem Zillow is facing for yourself. The Zillow homes in places like Phoenix, Northern Colorado, Florida are all being relisted by Zillow with price 2%-10% price cuts. Zillow is selling all of these homes for less than they bought it for. My friend sold one of his rental properties in Sacramento to Zillow in July 2021 and they still are not able to sell it and cut the price by 15K. Zillow was the one contributing to inflating this housing bubble until, they realized that the housing market was going back to its fundamental valuation and they do not want to be the ones holding the bag.
Speaking about those with the data and information selling. Jerome Powell, got caught again with insider trading AGAIN. A report came out that before the October downturn last year, Powell dumped his positions. We already other regional fed presidents like Kaplan, Rosenbran, Clarita were trading stocks during 2020 when the fed was heavily influencing markets. Who is there to keep them accountable? Nancy Pelosi??? Everybody in the top tier of the government are as crooked as Powell. The people in charge of the fed, gov are all ex Goldman, JP, Blackstone. It is crazy to me that Powell is not in jail? Get him out Biden!
