Zillow Finds Institutional Buyer For 2,000 Homes As Disastrous Flipping Business Winds Down
Zillow Group Inc.’s failed AI-powered house-flipping operation has been halted for more than a week, stuck with thousands of homes, has found an institutional buyer for some, according to WSJ.
New York-based investment firm Pretium Partners LLC., U.S.’ second-largest single-family landlord, is expected to purchase upwards of 2,000 properties as the Seattle-based digital real-estate company winds down its home-flipping business, called “iBuyers.”
Pretium owns about 70,000 single-family homes and will add the new ones to its expanding portfolio. A company spokesperson told WSJ:
“Pretium has long been committed to providing quality housing options for residents.
“At a time when move-in-ready homes are in short supply, we continue to invest in communities and improve access to housing throughout the U.S.”
The digital real-estate company plans to sell a total of 18,000 homes. Of that, 9,800 homes it already owns, along with another 8,200 that are in the process of being bought. The company will receive market prices and is expected to take a 5-7% loss on these sales.
Zillow’s third-quarter results revealed just how terrible its AI-powered house-flipping operation was, with the company taking a $380 million hit. It plans to write down as much as $569 million in losses and reduce its workforce by a quarter.
The sale to Pretium outlines how Zillow is transferring its portfolio to institutional investors who are on a mission to transform America into a “nation of renters.”
Zillow has done a disservice to the American people by bidding up homes with cheap money, helping to stoke a housing affordability crisis that has left many people in no position to own but rather rent.
A representative from Zillow said, “as we wind down our iBuying operations, we continue to sell homes the way we always have, which includes marketing them on the open market to sell them to all types of buyers such as individuals and families, institutional or individual investors, and nonprofits.”
There’s no word yet, if Blackstone – which already is not only America’s largest landlord but also the world’s largest real estate company with a $325 billion portfolio, will gobble up the rest of Zillow’s housing portfolio since its been on a buying spree this summer, purchasing 17,000 homes for $6 billion.
In 2019, Democratic Senator Elizabeth Warren blasted Blackstone for “shamelessly” profiting from the U.S. foreclosure crisis, arguing that Wall Street’s investment in single-family homes was a “huge loss for America’s renters.”
We doubt Warren will call out Zillow for its shameful actions. The company’s sale to Pretium shows its aiding and abetting Wall Street to become America’s largest landlord. Remember, we live in a world where government and banks don’t want you to own anything.
Wed, 11/10/2021 – 15:45