From Business Insider:
Zillow’s homebuying unit is having a rough couple of weeks.
The $25 billion property giant spent the past couple of years buying up thousands of homes through Zillow Offers, its instant buyer, or iBuyer, arm.
The bad news started rolling in October 17, when it announced that it would stop buying homes for the remainder of 2021. Jeremy Wacksman, its chief operating officer, said it was because of “an operational backlog for renovations and closings” that he blamed on “a labor- and supply-constrained economy inside a competitive real estate market.”
That move sent the stock plummeting, as investors had bet on Zillow Offers as a big driver of company revenue.
Insider then reported October 28 that the majority of its homes in its five biggest markets, in places like Atlanta, Phoenix, and Houston, were listed for less than what Zillow paid to purchase the homes. The numbers were particularly striking in Phoenix, where it’s listing more than 90% of the properties for less than it paid.
“They’re clearly losing money on homes, and the margins will be worse this quarter,” Erickson told Insider’s Daniel Geiger. “They’ll have to write down some of their inventory.”