Zillow program is pausing house purchases
Zillow has temporarily stopped its I-Buying program, which involves buying homes directly from sellers, renovating the homes and then quickly putting them back on the market. The company says that it can’t get homes renovated fast enough due to labor and material shortages. But is there a “Message” here for the “Arizona” housing market? We talked about it with ASU Real Estate Professor Mark Stapp.
According to Stapp, he said that Zillow’s business has evolved over the past four-to-five years to join the iBuyer market. “I think what’s happening to Zillow is not a reaction to the marketplace. It’s an internal issue.” Stapp mentioned that he is a little surprised.
The I-Buying program was tested and developed here, Stapp added. “We’ve been the hotbed for testing these kind of business models and platforms.” He mentioned that I-Buyers are focused on the areas where there are the smallest amounts of inventory. There is a small inventory in the metro Phoenix area.
“There is a really good method for determining the cost of renovation and crews set up to do that,” he said. He also added that one of the reasons metro Phoenix climbed out of the recession so early was because of institutional buyers. The I-Buyers evolved from there. “The trade-off is what they will pay you, versus what you sell the house for.”
Stapp said that supply-chains are still very much constrained.
