What happened with Zillow?
Zillow announced a few weeks back that they were putting a pause to their ibuyer program. We will dive into what an ibuyer program is in just a moment. Not even two weeks later, the CEO, Rich Barton, met with the board of directors and decided to stop the ibuyer program and lay off 25% of their workforce.
So what is an ibuyer program, and how does it affect you as a seller?
An ibuyer program is typically a company backed by investors that creates a transaction for a seller. Generally, sellers can pick their closing date and receive a "cash" offer for less than market value.
When we are in a seller's market, you can pick the close date and decide if you want a short-term rent back. On the flip side, if we are in a buyer's market, there typically isn't much wiggle room for sellers to "demand" things in the contract. Now that doesn't mean you cannot have a traditional 40+ day close, and you might not be able to pick exact dates.
So how does Zillow pulling out of the ibuyer program affect you?
Short answer. It doesn't. Zillow didn't purchase a single home here in our local market of Reno/Sparks, and that means they don't have homes to sell or "offload."
They currently have 3,000ish homes to close on by the end of the year, and that means in select markets, they will see an influx of inventory. The only issue, they won't all come at one time. Zillow is currently rehabbing and fixing the homes they have purchased and then turning around and selling them.
Zillow's news doesn't mean anything for the average consumer and will just be a blip in the news. Many agents say that the influx of inventory will be good for the market and allow more buyers to purchase homes, and more homes are always great for inventory and buyer demand.
Zillow's 3,000 homes will be offloaded over the next three quarters in the handful of markets they are in. But let's look at the national market at a 30,000 ft view for a moment. In 2021, there have been 6.49 Million homes sold, 3,000 homes on a national scale is .08% of homes.
3,000 homes mean nothing on a national scale and won't affect the housing inventory the way many think it will.
People are holding onto homes much longer than they have in the past. 2000-2007 the average age of homeownership was 4.21 years, and in 2019 we saw an all-time high of 8.09 years.
Our housing inventory is still in desperate need of homes. Builders have been unable to catch up and don't seem to have a plan to build faster or more homes than they are currently selling.