July 12, 2024

Selling Homes at a Loss in today’s market!

Selling Homes at a Loss - California Housing Markets 2021

At first Zillow said they were going to discontinue their home buying program through the end of the year. Then, Zillow announced that they were discontinuing the program altogether, and some speculated that at least 25% of their workforce was going to be terminated. They also announced that they would be selling off their inventory of approximately 7000 homes.

Selling Homes at a Loss

Many people believe that this is just a corporate misstep and that Zillow purchased too many properties to flip, in a market where it was hard to get reliable workers to upgrade the properties.

Personally, I believe this is partially correct, but with a operation the size of Zillow’s, I really think that they saw the handwriting on the wall and decided now was the time to liquidate all their properties that they had intended to flip because the market, as I’ve said before, seems to be in a topping phase.

Here in the Phoenix area, on one of the vocal TV new shows, there was a gentleman who said that he listed his property at $390,000. A number of local real estate agents told him this was so far above the neighborhood comps, that it was really a long shot that he would sell the property for that much. But, shortly after he listed the property for sale, Zillow made an offer a $412,000, which he immediately accepted!

Now, in the local MLS, Zillow has listed his home for sale,  at $387,000! Yes, that’s a $25,000 loss not even considering the closing expenses that would be required!

So, with a haircut  in the $30,000 range, on just this one property, makes me wonder how much of a loss they’re going to be taking when they finally liquidate all there 7,000 homes . . . looks to be in the millions!

I really feel that all their technical indicators are showing them that most of the country’s residential real estate is going to take a big dive in the very near future! For those of you have not been following my blog, my first post where I called the real estate market top was June 15, 2021 (https://brokerforyou.com/brokerforyou/real-estate-market-downturn/ ) . On June 17 I had a follow-up post ( https://brokerforyou.com/brokerforyou/real-estate-market-bust/ ) where I added additional indicators, that to me showed that the market was in a topping phase right now! I put the links to each one of those prior post above, and would suggest if you’re interested, to reread those posts!

Naturally, when it comes to real estate sales and values it’s all about local markets. So I can say, exactly if or when one particular local market will do 180 degree turn and start to head down. But, the irrational exuberance that we’ve seen in sales and real estate appreciation in the last few years, I wouldn’t be surprised if this coming down turn does not cut in half or completely wipe out any real estate appreciation that people have seen in the last 18 months to two years!

Selling Homes at a Loss

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