Perception is often more important than reality, however, and many real estate agents ( who have no love for Zillow anyway) and the public at large believe (at least partly) that iBuyers are manipulating the housing market, making them part of the reason housing prices are so high. Zillow, Redfin, and Wharton real estate professor Gilles Duranton pooh-poohed that theory: "If you could rig the residential housing market that easily, the Realtors would have done it long ago," Duranton told MarketWatch. Basically, the theory goes, if Zillow could buy 30 houses in a neighborhood, it could buy the 31st house for more money, thereby, setting the overall prices higher when it comes time to sell its inventory.
It's still unclear whether the iBuying business is sustainable during a recession.Īlso troubling for Zillow was a viral TikTok video that accused Zillow of market manipulation. If companies need to borrow money to finance homebuying operations, they're exposing themselves to great risk in a volatile market. 18, Zillow shares fell 6.8% in premarket trading after the announcement it would stop buying homes. In August, Zillow borrowed $450 million in a bond offering. Now they're still buying while Zillow has stopped. The big difference between then and now is that then the other top iBuyers – Opendoor, Offerpad, and Redfin – stopped buying as well. Once people started to demand homes, however, Zillow jumped back into the ring. Zillow stopped buying homes once before, in the early days of the pandemic when there was great uncertainty about the housing market. And it's getting harder for Zillow to get the people it needs, from house inspectors to determine whether Zillow should buy the home to contractors who can make those light repairs.
Although Zillow uses algorithms to determine how much to pay for a house, it still relies on real people to complete the job. Even if a house flipper (or Zillow) can get a good deal on a house, there's still the "fixing" part of the fix and flip.