![]() Of the Phoenix homes Insider reviewed, 36.5% were listed for less than the company first paid for them from the outset. Chief Operating Officer Jeremy Wacksman said the pause was because of "an operational backlog for renovations and closings" that he blamed on "a labor- and supply-constrained economy inside a competitive real estate market."īut Zillow still has to offload its existing inventory - and the high percentage of homes currently being marketed at a loss points to challenges for the property-tech giant. The potential losses highlight the risks of the iBuyer business, which aims to buy and resell properties for a profit in a roller-coaster market.Īfter purchasing 5,661 homes across 25 metropolitan areas from Austin to Tucson since the beginning of 2021, Zillow announced on October 17 that it would stop buying homes for the remainder of 2021. Out of 224 homes, 208 - or 92.9% - were priced below what Zillow paid. Insider reviewed all the homes for sale by Zillow in the Phoenix metropolitan area as of October 27. The iBuyer division, called Zillow Offers, uses artificial intelligence to help determine the price it would pay for homes and has attracted sellers by allowing them to receive an offer almost immediately and offload their property almost entirely online. The most striking numbers come from Phoenix, which is also the birthplace of the iBuyer, or "instant buyer" strategy Zillow embraced until putting it on pause last week. Zillow is listing more than half of the homes it owns in its key cities for less than it originally paid for them, an Insider analysis found. The losses could point to larger issues for one of the biggest players in the hot "iBuying" space.We examined 224 Phoenix homes Zillow is selling and found 92.9% are listed for less than it paid.Zillow paused buying homes for the rest of 2021, leading to questions about its flipping business.Low inventory is a key reason Zillow economists do not expect home prices to fall significantly. While total inventory is rising quickly, it still stands 43.5% below July 2019. This new inventory figure does not include new construction, so it represents current homeowners deciding not to list their homes. Compared to July 2019, 15.5% fewer new listings came on the market. Inventory is up 5.1% on a monthly basis, yet new inventory fell 13.6% month over month in July. Homes lingering on the market are driving for-sale inventory up at a fast clip. A wide swath of sellers are adjusting pricing to meet buyers’ expectations, as the share of listings with a price cut grew to 18.6% in July, a few percentage points higher than in July 2019. Among major metros, typical time on market is rising fastest in Austin, Phoenix and San Jose. Listings’ median days to pending jumped by two days in July to 10 - still nearly two weeks less than in July 2019. ![]() Home shoppers still on the hunt have more time to find and consider their options, and have a better chance of seeing price cuts. Values rose the most since June in Miami (1.5%), Richmond (1%) and Memphis (0.9%), although monthly growth has decelerated in these markets. The largest monthly home value declines were in San Jose (-4.5%) and San Francisco (-2.8%) - the nation’s most expensive major markets - followed by Phoenix (-2.8%) and Austin (-2.7%), which saw the most extreme growth over the pandemic. Home values measured by raw ZHVI fell from June to July in 30 of the 50 largest metro areas, an increase from 13 the previous month. As prices soften, many will renew their interest, and we will continue our progress back to ‘normal.’ With buyers ready in the wings once confidence returns, homeowners can expect to keep the majority of the equity gains they’ve seen in the last two years.” “This slowdown is about discouraged buyers pulling back after the affordability shock from higher rates. “Home values flattening so quickly after recent record growth might surprise, but it’s a badly needed rebalancing that gives home buyers more options, more time to shop and more negotiating power,” said Zillow chief economist Skylar Olsen. The nation’s typical home value is up 16% year over year and 44.5% since July 2019. It’s not unusual for home price growth to decelerate this time of year, but the small decline is the first monthly dip since 2012. ![]() Monthly growth in this metric has relaxed since reaching a recent peak of 1.9% in April, slowing to 1.2% growth in May and 0.8% growth in June. home value declined by 0.1% ($366) month over month in July and now stands at $357,107, as measured by the raw Zillow Home Value Index (ZHVI). ![]() With buyers’ purchasing power diminished by nearly two years of double-digit price growth and higher mortgage rates, competition for homes is dropping off. After two years of unprecedented growth, home values fell slightly from June to July, according to the latest market report from Zillow.
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