A wide swath of sellers are adjusting pricing to meet buyers’ expectations, as the share of listings with a price cut grew to 18.6% in July, a few percentage points higher than in July 2019. Among major metros, typical time on market is rising fastest in Austin, Phoenix and San Jose. Listings’ median days to pending jumped by two days in July to 10 - still nearly two weeks less than in July 2019. Home shoppers still on the hunt have more time to find and consider their options, and have a better chance of seeing price cuts. Values rose the most since June in Miami (1.5%), Richmond (1%) and Memphis (0.9%), although monthly growth has decelerated in these markets.
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The largest monthly home value declines were in San Jose (-4.5%) and San Francisco (-2.8%) - the nation’s most expensive major markets - followed by Phoenix (-2.8%) and Austin (-2.7%), which saw the most extreme growth over the pandemic.
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Home values measured by raw ZHVI fell from June to July in 30 of the 50 largest metro areas, an increase from 13 the previous month. As prices soften, many will renew their interest, and we will continue our progress back to ‘normal.’ With buyers ready in the wings once confidence returns, homeowners can expect to keep the majority of the equity gains they’ve seen in the last two years.” “This slowdown is about discouraged buyers pulling back after the affordability shock from higher rates. “Home values flattening so quickly after recent record growth might surprise, but it’s a badly needed rebalancing that gives home buyers more options, more time to shop and more negotiating power,” said Zillow chief economist Skylar Olsen. The nation’s typical home value is up 16% year over year and 44.5% since July 2019. It’s not unusual for home price growth to decelerate this time of year, but the small decline is the first monthly dip since 2012. Monthly growth in this metric has relaxed since reaching a recent peak of 1.9% in April, slowing to 1.2% growth in May and 0.8% growth in June. home value declined by 0.1% ($366) month over month in July and now stands at $357,107, as measured by the raw Zillow Home Value Index (ZHVI). With buyers’ purchasing power diminished by nearly two years of double-digit price growth and higher mortgage rates, competition for homes is dropping off. And according to iBuying analyst Mike DelPrete, Zillow's competitors aren't having the same problems - with Opendoor's median home priced $4,400 above what they paid (which, quite frankly, is also pretty terrible).After two years of unprecedented growth, home values fell slightly from June to July, according to the latest market report from Zillow. The program has vacuumed up properties across the country to flip, only to be met with fierce competition from services such as Redfin, Offerpad and Opendoor. Launched in 2017, Zillow's iBuying arm uses a wide array of real-estate data with the goal of quickly and efficiently acquiring properties to flip for a profit. Given that the Case-Schiller index indicates Phoenix real estate is still on fire, this may simply boil down to Zillow's out-of-control 'AI' getting off on outbidding plebs in a greedy bet on unlimited growth. Right now, their median loss per home in the area is nearly $29,000.
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As Insider notes, if the company sold all of it's Phoenix homes right now at their current list prices, it would lose $6.3 million dollars. In short, Zillow is having issues clearing out its existing inventory and just needs it moved. Just 16 homes were listed above Zillow's purchase price - and all 16 were listed within the last two weeks, meaning they have yet to experience meaningful price cuts. What's more, while most of the Zillow sales were first listed at more than they paid - eventually receiving price cuts that brought them into the red, 36.5% of properties were listed for less than the company first paid. Chief Operating Officer Jeremy Wacksman said the pause 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." -Insider The potential losses highlight the risks of the iBuyer business, which aims to buy and resell properties for a profit in a roller-coaster market.Īfter purchasing 5,661 homes across 25 metropolitan areas from Austin to Tucson since the beginning of 2021, Zillow announced on October 17 that it would stop buying homes for the remainder of 2021. Out of 224 homes, 208 - or 92.9% - were priced below what Zillow paid. Insider reviewed all the homes for sale by Zillow in the Phoenix metropolitan area as of October 27. Now, it appears Zillow's AI-driven wager was dead wrong.
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Zillow's iBuyer division - also known as Zillow Offers, uses artificial 'intelligence' to set target prices for homes, and lets sellers receive an almost immediate offer on their property, almost entirely online.