Zillow Pausing Its iBuying Program
Many NE Florida residents have likely been contacted to sell their homes, even if there is no “For Sale” sign in the yard. There are several companies, including Zillow, who have been busy buying up homes using this method. But now, the real estate pages are filled with articles about Zillow first pausing and shutting down its iBuying program. It’s all enough to make homeowners dizzy as the situation changes quickly. So, what’s happening?
The Fuel for iBuying and Its Competitors
For various reasons, the number of people attempting to buy homes far outnumbers that of selling. More and more people are working from home, buying bigger homes to accommodate home offices. Many homeschool their kids, so they also need more space for that. Certain parts of the country are experiencing this search for properties more than others, especially as Covid continues to demand attention. The population is shifting out of some large cities as people move to a better climate or a tax-friendly state since they will be working from home anyway.
The result is a shortage of homes in many areas of the country. Homebuyers are willing to pay top dollar for a home, but the number of houses for sale hasn’t kept up with the demand. It was only a matter of time before an innovative idea appeared in this scene.
Zillow Enters the Homebuying Market
Zillow, known for its online real estate listings, jumped on the home-buying bandwagon in 2018 and operates that arm of the business in 25 cities. The company bought just over 3,800 properties in the second quarter of 2021 alone, about twice the number purchased the quarter before. Zillow offers cash and a quick closing process to homeowners, and the purchase price is often higher than the market price in the area.
This can often be a win-win. The homeowners sell the house and pocket the cash. Zillow does some quick renovations on the home and sells it in a market short on homes for demanding buyers. It worked for Zillow. For a while.
So, What Happened?
A wrinkle that Zillow (and its competitors) didn’t anticipate is a shortage of labor and building materials, another Covid consequence to some degree. Zillow bought so many homes, so quickly, that the company can’t stay true to its model of closing, renovating, and reselling fast enough due to a backlog on the renovation end. The devastating result for Zillow is that they have had to sell many properties for less than their purchase price. Not a good thing for their bottom line, of course.
Zillow didn’t anticipate the need for a larger workforce, either. All the houses purchased must be herded through the entire process, from closing to renovation to its sale. The large iBuyers offices had to manage billions of dollars in capital and all the specifics of prepping homes for sale.
The houses sit if the labor and renovation materials aren’t in the quantities needed. Or are sold at a loss. The result has been Zillow trying to off-load thousands of homes to investors, which doesn’t help the immediate need for homes for demanding buyers.
Local Realtors and Zillow
Picture the Zillow iBuying model as a huge machine that suddenly grinds to a halt, with insufficient people or supplies on-site to fix it quickly.
Buyers searching for homes in the NE Florida area probably won’t be helped to any degree by Zillow or its competitors. There still aren’t enough homes for sale in the area. And the only way to find your new home is to work with an experienced local realtor who knows the market, as you’ll find at Fluid Realty.
Sellers may find that the recent increase in home values and selling prices is starting to slow down after 2 years of accelerated growth. Fluid Realty is watching this for you, so check our News page often to learn where things are headed as 2022 rolls around.
Fluid Realty is a successful local team of professionals that know the area and the market. We are knowledgeable and experienced and make ourselves available to you to make your home buying or selling process as easy as possible.
Contact Fluid Realty today to find your new home!
