This house at 6630 S. Nash Way in Chandler, Ariz. is the first one Zillow ever purchased directly through Zillow Offers. (Zillow Photo)
When Seattle-based online real estate giants Zillow Group and Redfin jumped into directly buying and selling homes to the consumer, the real estate market was blazing hot. Now things are starting to slow down — a trend foreshadowed by Redfin CEO Glenn Kelman — at a time when both companies have ramped up their commitment to these new programs.
Zillow and Redfin will give updates on their home sales businesses this week as part of their quarterly financials. While Redfin has been buying and selling homes for more than a year, this will be the first time we see numbers from Zillow’s program, which just kicked off in April and hadn’t completed any sales in the previous quarter.
Both companies are hoping that buying and selling homes directly can open up a new revenue stream and simplify the often vexing sales process. But the move is a risky bet against the backdrop of a national housing market that is starting to shift as more houses hit the market and buyers frustrated by sky-high prices are sitting out.
“Buyers have just said ‘enough is enough. I am not going to pay those prices,’” Redfin CEO Glenn Kelman said at the 2018 GeekWire Summit. “When you have wages growing very slowly, relative to housing prices, and then you add to that that interest rates are starting to move up, you reach a breaking point. And we have reached that breaking point.”
GeekWire chronicled the first house Zillow ever purchased directly over the summer, a 15-year-old, four-bedroom, two-bath ranch-style home in the Phoenix suburb of Chandler, Ariz. Zillow purchased the house in May for $410,000 and put it on the market a …read more