What to Make of Zillow’s “House Flipping” Misadventure
“All it took was a little cool-down in the still sizzling-hot real estate market”
by Bob Stokes
Updated: November 09, 2021
The housing market is losing some of its sizzle.
Pending Home Sales Fell Unexpectedly in September
That's an Oct. 28 CNBC headline.
Specifically, U.S. pending home sales fell 2.3% in September compared to August. Analysts had expected a gain.
And, here's a Nov. 6 Marketwatch headline:
'More sellers are cutting their list price.'
This sudden dissipation in demand for homes came at a very inopportune time for Zillow, the online real estate marketplace company.
You see, Zillow apparently got caught up in the excitement of the housing market's rapidly rising prices and decided to go into the house flipping business.
As of Nov. 1, according to Bloomberg, Zillow owned more than 7000 homes. Earlier this year, the firm was so gung-ho on the positive prospects for the housing market that it "tweaked the algorithms" it uses to "make higher offers, leaving it with a bevy of winning bids."
So far, so good?
Our just-published November Elliott Wave Financial Forecast picks up the story from here:
Turns out Zillow's decision to "stake its future on the idea that data scientists could power a business that buys and sells thousands of homes a month" was not such a great idea. All it took was a little cool-down in the still sizzling-hot real estate market. According to a KeyBanc Capital analysis of 659 homes owned by Zillow, two thirds are now offered at prices below what the company paid for them.
As a Nov. 3 Bloomberg headline says:
Zillow's Flipping Halt Marks Stunning Collapse in Housing Push
Zillow just announced that it was eliminating 2000 jobs and taking a $339.2 million loss in Q3 versus a $38.6 million profit a year ago.
The key takeaway is that hopping aboard a red-hot financial trend may not work out as expected. Indeed, many investors tend to jump in with both feet just when a trend is on the verge of turning.
This applies to real estate, stocks, bonds, gold, silver, etc.
Our just-published November Elliott Wave Financial Forecast provides you with insights on major U.S. financial markets that will help you to prepare for trend changes that will likely take the majority by surprise.
Follow the link below to read it now.
A Timely and – Crucial – Message
Our just-published November Elliott Wave Financial Forecast says:
Staying highly attuned to the progressing wave structure has never been more important.
Learn why this statement about the U.S. stock market was made.
Your financial future may depend on how you prepare for what may be just ahead.
Get Elliott wave insights into the major U.S. stock indexes by following the link below.
Financial Forecast Service
All month long, Financial Forecast Service helps you stay ahead of the waves in the U.S. markets on the timeframes that matter the most. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. It is our most popular service.
Comprises the monthly Elliott Wave Financial Forecast, 3x-per-week Short Term Update and at least 12x-per-year Elliott Wave Theorist.
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