Earlier this month, Zillow announced that it will be shutting down its home iBuying program. Known as Zillow Offers, the division of Zillow Group began in 2018 and served as an internet homebuying program where sellers could sell their properties directly to Zillow who would perform light renovations and hopefully turn around and sell it for a profit. It seems, however, that their business plan did not pan out as hoped, causing Zillow to throw in the towel this month on iBuying due to major losses accumulated since the project began. As the program is phased out, however, many are left wondering what will happen with the properties that Zillow is currently holding.
Zillow has reported that it is currently sitting on 9,800 properties that it already owns, and another 8,200 that it currently has under contract for purchase. That makes a total of more than 18,000 properties under the flag of the now cancelled program, amounting to more than $3 billion worth of real estate. So what will happen to these properties? Many are currently for sale for less than what the company originally paid for them. As Zillow tries to mitigate losses, it is unclear what will happen with these properties. Many see this as a great thing for markets that are struggling with lack of inventory. An influx of thousands of properties could offer some relief to buyers who are faced with soaring prices and limited choices.
It is not as simple as this, however. It appears as if many - maybe even most - of these properties may never even hit the MLS. It has been reported that several large national investment companies are considering, some of which are already in talks, to purchase large chunks of these properties. Companies like Invitation Homes, American Homes 4 Rent, and Pretium Partners are often not focused on flipping homes for sale, but instead hold the properties and rent them out. It seems that the rental markets around the country may benefit more than home buyers as a result of Zillow’s real estate off-load.
Listings of Florida Keys single family homes for sale could use a healthy dose of inventory. As many of the Zillow holdings are located in Florida, many buyers are hoping for new inventory to hit the market. It is unclear if this will impact the Florida Keys real estate market in any meaningful way, especially if many of these homes turn into rentals.