Among his concerns are that rivals like Opendoor will continue to increase market share while Zillow takes a breather, making it harder for Zillow to bounce back. Wedbush analyst Ygal Arounian downgraded Zillow shares to "neutral" from "outperform" on Tuesday in light of the pause on the company's home-buying pursuits. Other analysts were more circumspect about Zillow's move, especially in light of its recent success with iBuying. "Because Zillow's business model is much more focused on aggregating eyeballs across the spectrum of real-estate transactions, it may make sense for them to periodically de-emphasize the riskiest or most capital-intensive parts of their business, as opposed to those of their peers for whom that's all they do," said Michael Greene, co-founder and CEO of ResiShares, a residential real-estate investment company. Like Redfin, Zillow has other business lines it can depend on for revenue. Zillow's place in the iBuying landscape is different from some of its competitors. "In such a setup, the current pause lowers inventory risk to Zillow, in our view." "Labor shortages in the economy are real and likely resulting in bottlenecks along the chain," analysts at Truist wrote in a research note. Those same issues extend to renovation projects, as well. In a recent report, the National Association of Home Builders noted that construction companies are still facing major headwinds in completing construction of new homes, namely shortages of building materials and labor. Some analysts and industry experts, however, noted that the pressures Zillow says it's facing are very much real. "We look forward to taking our services and expertise to homeowners in California that want an easy, seamless real-estate experience," Offerpad CEO and chairman Brian Bair said in the announcement.Ī spokesperson for Opendoor (OPEN) said that the company "is open for business and continues to scale and grow." Meanwhile, Opendoor co-founder Keith Rabois said on Twitter(TWTR) that Zillow's claims regarding supply-chain bottlenecks was "just an excuse." On Monday, Offerpad (OPAD) announced that it is launching in three markets in California in the first quarter of 2022: Riverside, San Bernardino and Sacramento. Redfin (RDFN) noted that its iBuying division, called RedfinNow, "continues to make offers" in all 29 markets it operates in, and the company plans to move ahead with its expansion plans. In fact, it's just the opposite - most of Zillow's competitors re-emphasized their expansion plans in response to the announcement. Other iBuyers have not followed suit, as of now. She added that the pause would enable the company "to focus on sellers already under contract" and the company's existing inventory of homes. "We're operating within a labor- and supply-constrained economy - inside a competitive real estate market, especially in the construction, renovation and closing spaces," Jeremy Wacksman, Zillow's chief operating officer, said in the announcement. Zillow's competitors continue to expand their operations
In explaining the move, Zillow said the company was facing a backlog of renovations and dealing with operational-capacity issues. The service, Zillow Offers, is what's known as an "iBuyer" - it purchases and sells homes directly to consumers, typically renovating them in between.įollowing a report from Bloomberg, Zillow (ZG)(ZG) confirmed that its Zillow Offers division would not be signing any additional new contracts to purchase homes through the end of 2021.
And some argue that more concerning trends could be on the way. Zillow's unexpected announcement this week that it's putting a temporary stop to its home-buying activities raised many analysts' eyebrows. Zillow claims that 'operational capacity constraints' has caused the hiccup in its home-buying business, but some analysts argue that bigger issues may be afoot
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