HN Theater @HNTheaterMonth

⬐ reducesuffering

Apparently this guy hasn’t heard of market making before. He’s complaining that Zillow buys and then sells homes. Yes, welcome to a market.

I repeatedly hear these ad hoc solutions to the egregious rise in housing costs. They’re just silly whack a mole bandaids. Address the supply issue in a supply and demand based market, and you don’t need all this other nonsense complaining about foreign buyers, Zillow, Blackrock, Californians, or whatever else.

⬐ ashtonkem

1) It’s not clear that market making is all that necessary or desirable with homes. Homes are not stock shares.

2) Zillow does more than just make a market, they’re also supposed to be facilitating transactions between buyers and sellers. The fact that they’re also a party to these same transactions is an obvious conflict of interest.

⬐ reducesuffering

> 1) It’s not clear that market making is all that necessary or desirable with homes. Homes are not stock shares.

I think it's pretty well established in economics that market making improves liquidity. As a parallel, in the used car market, having used car salesmen allows people to quickly liquidate a car to cash without needing to go through the work of finding buyers. Similar on the sell side.

And the housing market is one very sorely needing liquidity, as even the quickest closing times take 30 days, at the cost of a 5-7% spread amounting to an average of $25,000 wasted on middlemen.

⬐ ashtonkem

To be clear, I said that it’s not clear whether or not we need market makers, not liquidity. Market makers can improve liquidity, but they are not one and the same, contrary to the protestations of the market makers themselves.

The housing market needs liquidity, but:

1) It’s far from clear that market making can fix this.

2) Market making has tradeoffs, especially in non-fungible items.

On the first, the housing market is illiquid for a variety of reasons, a desperate lack of housing stock and the high cost of switching being among them. No market maker is going to produce more housing, nor are they going to fix the fact that moving is slow and expensive and banks are not quick.

On the second, market makers extract value from each transaction. The more unique the transaction, the more market makers tend to make. Used car sales people charge a hefty premium to the buyer and seller, about $2k average each, for the convenience of them “making” a market. Given how expensive the American housing stock is, this is a convenience that Americans cannot afford.

And that’s being extremely generous in assuming that what Zillow is doing is trying to just provide liquidity, rather than speculating in the real estate market using their customers data.

⬐ randomhodler84

How is buying up all the housing stock and selling it for 20% more than you paid adding liquidity?? I think a more accurate term is “scalping”. Houses and 3000 series nvidia cards are in demand. We don’t want big players scalping the product back to us. Nothing is gained except inefficiency and grift.

⬐ reducesuffering

> buying up all the housing stock

Because this is hyperbole. Checking Zillow yourself, you’ll find that they have maybe 0.5% of listed homes across all markets.

⬐ ashtonkem

Buying up half a percent of the housing stock is a lot, especially when there’s a shortage of housing.

⬐ 8bitsrule

This would be a great time for these people to take a vacation and leave housing alone. It's a really shitty time to be adding stress to the situation.

⬐ readflaggedcomm

Cheap debt always results in buying and building. Building has been especially expensive lately, so buying became more popular. Both can be speculative, at large or small scales.

How is this "control"? What makes it unfair? Maybe all those recently listed properties were undervalued compared to expensive construction.

⬐ jb775

He says Zillow "overpays" for properties, then quickly flips them for a 20% profit. I'd say they're underpaying if that's actually the situation. Zillow is taking on a decent amount of risk by purchasing a property, so I don't have a problem with them making money off the process...especially if it's making the selling/buying process easier for all parties.

I don't understand how commission based realtors exist nowadays. They primarily provided value in the past by being the sole network between sellers/buyers. That monopoly doesn't exist anymore, so it doesn't make sense for them to demand a huge commission. I personally look forward to companies like Zillow disrupting this archaic system.

Also, the high prices for real estate make sense right now. Millennials are well past settling-down age in combination with a flight from inner cities that are becoming crime-ridden ratholes. (Just look up how many shootings occurred in Chicago this past weekend if you don't believe me.) I wouldn't be surprised if this guy had a "10 Reasons Real-Estate is a Terrible Investment" video a few years ago when prices were cheap.

⬐ ashtonkem

I’d say the issue isn’t that Zillow is speculating in the market, well not any more than any other real estate speculator, but that they’re now effectively trading against their customers.

⬐ throwawayftphub

I had planned on selling my own property without an agent but a different video warned if I did that, Zillow would immediately reduce my Zestimate by ~20%. Because of that I ended up using a agent, only to find that Zillow immediately removed the zestimate once we listed the property which defeated the whole purpose of hiring an agent.

The above was for Austin and whether or not a zestimate appears for an active property seems random.

Now I would like to sell my property in Reno, NV without an agent and I am not sure what will happen to the zestimate. Perhaps I am overvaluing the importance of Zillow's estimate. There are other stories that Zillow will immediately knock down the estimate of a For Sale By Owner home and then call the seller with an offer that is slightly above their lowball estimate. But that level of manipulation seems hard to believe.

⬐ jjeaff

There are flat fee brokers that will literally do nothing except list your home on the MLS. I believe I paid $200 about 10 years ago and then sold the home on my own. But I believe on the MLS, it did not show as officially for sale by owner because of that flat fee broker.

⬐ paulddraper

> Perhaps I am overvaluing the importance of Zillow's estimate.

I'm guessing so.

Zestimates are just so wildly off...like +/- 20%. (Hey maybe that's why, IDK.)

I bought my first house in Salt Lake City in 2014 and every house in the area was supposedly priced "above Zestimate". The market was provably different than Zillow's claims.

I just learned to ignore it altogether. Houses aren't cars; there's no usable Blue Book.