TIL on TikTok: Zillow Buys Houses
Added 2021-09-23 22:53:07 +0000 UTCRegina shares a viral TikTok that shows a potentially dark future for real estate.
- TikTok number 1
- TikTok number 2
- Planet Money (Jul. 2021): Three Reasons for the Housing Shortage
- Planet Money (Apr. 2020): What If No One Pays Rent? (this is the one I referred to that made me cry)
- The Zillow skit on SNL
- New York Times (Jul. 2019): Real Estate’s Latest Bid: Zillow Wants to Buy Your House
- CNN Business (Feb. 2020): Zillow is losing millions on selling homes. But its risk-taking CEO isn't worried
- New York Times (Mar. 2020): A $60 Billion Housing Grab by Wall Street
- Nevada Current (Nov. 2020): Will Zillow make housing even less affordable?
- iBuyers
- Zillow's Quarterly Results
Comments
Guys, I love the podcast and this was a great story, but I want to challenge your intuition that what Zillow is doing is icky. I work in finance (maybe that makes me suspect), and what Zillow is doing is not only quite standard practice in various markets, but also good for buyers, sellers, and the health of the market itself (with one important caveat that I'll explain in a bit). Zillow has established itself as a buyer/seller of last resort, meaning that Zillow Offers provides a semi-guarantee that you, as a buyer or seller, will have access to inventory (buyers) or cash (sellers) more quickly. Since Zillow is using publicly available data that anyone can scrape off of Zillow as soon as it goes live, anyone can do what Zillow is doing (several companies, like Blackrock, have been doing this for years). By being another entrant in the market as a buyer, it creates greater competition and thus better prices for everyone concerned--buyers and sellers. This is all assuming that Zillow does not use private data--that is, if it gets data for house prices in a zip code and then uses that to make purchasing/selling decisions before that data is public, that would be unethical and possibly illegal (I know this would be very illegal with stocks or bonds; real estate is less regulated). However, since the power of Zillow's data is in aggregate and over time, this isn't really possible; they'd have to keep thousands of submitted listings hidden or unpublished for days to get this edge, and even then this edge would be only marginally valuable. And whatever profit they'd make from doing it would be miniscule compared to the backlash from users and the media. A lot of finance nonsense is on Tiktok these days, and this vitriol against Zillow is a fine example of that--but definitely not as bad as, say, the cryptocurrency influencers. Anyway love the show and just wanted to share my viewpoint as someone who works on this stuff for a living.
Michael
2021-09-24 07:08:53 +0000 UTC
