Overbought
Did you know that Zillow, the company you use to look for homes and apartments, has been buying thousands of homes? According to some estimates, they bought around 8,000 homes in the third quarter alone. The company figured it could take advantage of the booming housing market and offload the homes for a profit. However, many of Zillow’s properties are now listed for less than what the company paid for them.
Zillow is trying to sell some 7000 homes for $2.8 billion, seeking to cut their losses. An examination of 650 Zillow-owned properties revealed that two-thirds were priced for less than the company paid for them. Zillow tried to take advantage of the hot housing market just as it was starting to cool off.
The company will sell the homes to multiple institutional investors rather than selling them to one party. Zillow usually sells homes to single-family landlords via its iBuying business, but this massive sale requires institutional buyers.
Zillow’s iBuying business is a spin on traditional house-flipping. People looking to sell their homes can request an offer from Zillow, and the company’s algorithm will generate a price. If the owner accepts, Zillow buys the property, touches it up a bit, and then puts it back up for sale.
It’ll be interesting to see which institutional investors purchase the homes from Zillow.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
