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Used car companies buying up all the inventory during a shortage and Zillow buying up properties in cash over their own online estimates. Regulation anyone?

jjeaff 5y ago
Used car market in the US is valued in the $150B range. So something like that could possible have some affect. The housing market in the US though is on a different level. $8-9 trillion, so I don't think any one player is going to even make the smallest of differences unless they are focusing in specific markets and maybe manipulating just that area.
- Retric 5y ago
  Like insider trading it doesn’t matter how large the market is, it’s a question of the individual transactions. It’s not guaranteed that these companies will start intentionally misinforming people for profit, but that’s very much the risk.
- addicted 5y ago
  That’s the value of the entire stock. But that’s not the inventory that is being traded at any point of time. The vast majority of housing in the US sits in a single family without switching hands for probably decades. So the actual market is probably 20-30 times smaller, and so a single major player is far more capable of having an influence on pricing. Besides, housing is not a national market. A buyer does not usually decide that they want to own a house and then scour the entire country to find houses they could live in. They usually decide a place they want to live in, and then look at a much smaller market within that area. So even if a single entity cannot impact the national market, they could definitely impact local markets.
  - sokoloff 5y ago
    Average ownership duration is up to 10.5 years in 2021.
    - sjg007 5y ago
      This is because of 2008. People are just now getting out of being underwater.
J253 5y ago
> Zillow buying up properties in cash over their own online estimates A discussion around this probably deserves its own entire page, but as I am currently looking for a home as a first-time buyer, seeing “Zillow owned home” labels all over the area in which I’m looking (as if it’s some sort of positive thing) has been infuriating. All they do is use their scale and data science to push me out of the market several times over! I present no evidence, to prove this, but from what I can tell, this is what they seem to do: First, they use scale and data science to find what they consider under-priced homes and buy them for cash. If I happen to find the same home for sale at the same time, what seller is going to go with a traditional loan over a full cash offer who could easily offer more if needed? I can’t compete with that. Secondly, they don’t do anything to the house (aside from clean it up and taking nice pictures—no value added) and then resell it for multiple tens of thousands more than what they just paid. If this house was originally at the high end of my budget, bought by Zillow, then re-listed for more, I can no longer afford it. Third, if that house DOES sell for more to someone else, it just drives up the rest of the prices in the neighborhood. A lose-lose all around for me and my family. I don’t see how Zillow being able to flip houses is good for anyone. And by flip, I don’t mean fix up—-I have yet to find a Zillow-owned home that has anything of substantial value added to it—-and saving 1% of closing costs or whatever their incentive is by owning a Zillow house is not enough value add. FWIW, I’ve spent a LOT of time of the past few years trying to get a hold of reliable MLS market data to do my own sort of analysis to try and find affordable enclaves or diamonds in the rough or whatever and that data is damn near impossible to get free access to. So the fact that Zillow has this data and also has unlimited pockets and FTEs who work on this stuff all day…it doesn’t feel right to me. And it’s not like they’re driving up prices of arbitrary goods or services—these are single family homes (in probably the most popular price range) they’re inflating when we’re already in the middle of a national housing crisis! /rant Edit: spelling/clarification
- 6AA4FD 5y ago
  I'm not saying it's fair, but is is probably better financially for current home owners. Sell faster, with fewer/no contingencies and waiting periods, and Zillow may potentially price "hassle" lower— making deferred maintenance less expensive to take care of. Is it better for people who are trying to break into the housing market now? No. Is it better for people who are trying to sell and move out in a low-demand area? Probably not, except it might speed up the process.
ryankupyn 5y ago
I think it'd be risky for Carvana if they tried "cornering the market" on used cars - unlike houses, used cars fall in price pretty quickly and new-car production has the potential to increase as car manufacturers respond in a way that housing production does not. If Carvana buys up all the inventory to drive up prices they'll need a plan to unload as well - while keeping prices high.
ineedasername 5y ago
The Zillow thing seems to work pretty well for home sellers-- fast sale, cash, over asking price. That's pretty much a seller's dream. Although the sleazier part might be people shopping homes on Zillow, which can then promote its own listings above those not owner by Zillow.

jjeaff 5y ago

Used car market in the US is valued in the $150B range. So something like that could possible have some affect. The housing market in the US though is on a different level. $8-9 trillion, so I don't think any one player is going to even make the smallest of differences unless they are focusing in specific markets and maybe manipulating just that area.

Retric 5y ago
Like insider trading it doesn’t matter how large the market is, it’s a question of the individual transactions. It’s not guaranteed that these companies will start intentionally misinforming people for profit, but that’s very much the risk.
addicted 5y ago
That’s the value of the entire stock. But that’s not the inventory that is being traded at any point of time. The vast majority of housing in the US sits in a single family without switching hands for probably decades. So the actual market is probably 20-30 times smaller, and so a single major player is far more capable of having an influence on pricing. Besides, housing is not a national market. A buyer does not usually decide that they want to own a house and then scour the entire country to find houses they could live in. They usually decide a place they want to live in, and then look at a much smaller market within that area. So even if a single entity cannot impact the national market, they could definitely impact local markets.
- sokoloff 5y ago
  Average ownership duration is up to 10.5 years in 2021.
  - sjg007 5y ago
    This is because of 2008. People are just now getting out of being underwater.

J253 5y ago

> Zillow buying up properties in cash over their own online estimates A discussion around this probably deserves its own entire page, but as I am currently looking for a home as a first-time buyer, seeing “Zillow owned home” labels all over the area in which I’m looking (as if it’s some sort of positive thing) has been infuriating. All they do is use their scale and data science to push me out of the market several times over! I present no evidence, to prove this, but from what I can tell, this is what they seem to do: First, they use scale and data science to find what they consider under-priced homes and buy them for cash. If I happen to find the same home for sale at the same time, what seller is going to go with a traditional loan over a full cash offer who could easily offer more if needed? I can’t compete with that. Secondly, they don’t do anything to the house (aside from clean it up and taking nice pictures—no value added) and then resell it for multiple tens of thousands more than what they just paid. If this house was originally at the high end of my budget, bought by Zillow, then re-listed for more, I can no longer afford it. Third, if that house DOES sell for more to someone else, it just drives up the rest of the prices in the neighborhood. A lose-lose all around for me and my family. I don’t see how Zillow being able to flip houses is good for anyone. And by flip, I don’t mean fix up—-I have yet to find a Zillow-owned home that has anything of substantial value added to it—-and saving 1% of closing costs or whatever their incentive is by owning a Zillow house is not enough value add. FWIW, I’ve spent a LOT of time of the past few years trying to get a hold of reliable MLS market data to do my own sort of analysis to try and find affordable enclaves or diamonds in the rough or whatever and that data is damn near impossible to get free access to. So the fact that Zillow has this data and also has unlimited pockets and FTEs who work on this stuff all day…it doesn’t feel right to me. And it’s not like they’re driving up prices of arbitrary goods or services—these are single family homes (in probably the most popular price range) they’re inflating when we’re already in the middle of a national housing crisis! /rant Edit: spelling/clarification

6AA4FD 5y ago
I'm not saying it's fair, but is is probably better financially for current home owners. Sell faster, with fewer/no contingencies and waiting periods, and Zillow may potentially price "hassle" lower— making deferred maintenance less expensive to take care of. Is it better for people who are trying to break into the housing market now? No. Is it better for people who are trying to sell and move out in a low-demand area? Probably not, except it might speed up the process.

ryankupyn 5y ago

I think it'd be risky for Carvana if they tried "cornering the market" on used cars - unlike houses, used cars fall in price pretty quickly and new-car production has the potential to increase as car manufacturers respond in a way that housing production does not. If Carvana buys up all the inventory to drive up prices they'll need a plan to unload as well - while keeping prices high.

ineedasername 5y ago

The Zillow thing seems to work pretty well for home sellers-- fast sale, cash, over asking price. That's pretty much a seller's dream. Although the sleazier part might be people shopping homes on Zillow, which can then promote its own listings above those not owner by Zillow.