Zillow to Start Buying Houses in Pandemic Market
Founded in 2006, Zillow is one of the largest American real estate companies to ever exist, basically making a huge name for themselves online as a service offering an easily accessible database for millions of people buying and selling homes in the US. Over the years, Zillow has increased their reach tremendously, offering their services for Canadians and even going into the business of buying and selling homes, not simply listing them on a website database. Zillow announced earlier on Thursday, May 7, that they would begin purchasing homes despite the current state of the US economy.
Some people have already taken a very cynical approach to Zillow’s decision, suggesting that the service isn’t purchasing real estate in the nation despite the economy, but rather because of it, in order to take advantage of very low prices and sellers desperate to make some quick money by selling their properties. However, according to people at Zillow, the worst of the pandemic “has passed,” and therefore the doors need to be pried open for the housing market, if the economy is ever expected to renound.
Zillow purchases real estate through their Zillow Offers program, which is largely driven by the desires of their investors. Very similar to how a publicly traded company acts in the interests of its shareholders, Zillow is primarily driven by investors with their Offers program, at least insofar as that’s where their capital for purchasing is raised. So this basically means that dozens of individuals are ready to get the housing market booming again, and Zillow is more or less their agent for this.
Up until March, Zillow was doing quite well and was rather busy buying homes. Though after citing concerns for “public safety” and the “rapid developments” of the global pandemic, Zillow was also among the first large real estate companies to put their business dealings on hold. However, the company was still busy selling homes, even if they were no longer buying them. During the past two months of nearly nationwide lock-down, Zillow sold roughly 8,000 homes.
So even with an unemployment crisis, thousands upon thousands of Americans were trying to take advantage of falling real estate prices to buy homes. This makes perfect sense, though one has to wonder if Zillow regrets its decision, as they could have likely purchased most of these homes for a lot lower than market value.
Zillow’s CEO said that we should “forget the stock market for a second” and focus more on a consumer market, the housing market. As we witnessed back in 2008, if the housing market goes, the rest of the economy follows. Housing is always what’s prompting thousands of New Yorkers to protest during the height of the worst viral pandemic since the Spanish Flu a century ago.
A Boost to the Economy Widely Felt
One thing that a lot of economic experts agree on is that real estate businesses acting as if it’s business as usual in any economy is going to inspire confidence. As can be seen by the sheer numbers of houses bought and sold, the housing market did not even come close to collapsing. A lot of business was lost, and a lot of sellers had to either take a discounted asking price on their homes or just leave them listed while refusing to sell. But a downturn is not a collapse, and the housing market remained relatively strong despite everything that was happening around it. This is really a great boost of confidence and also a pretty good predictor as to the strength of the economies in the United States and in Canada.
It really goes to show that it truly takes a whole lot to wreck an economy, which shines a light on just how bad things were back in 2008 when we basically had a global recession due to a total housing market collapse. The virus pandemic did not come close to touching those levels, which is certainly a great thing.
Zillow may be one of the most popular large businesses involved in real estate, but they’re just one of hundreds who suspended their practice. Experts are hoping for a domino effect here with Zillow re-entering the market, in that it might inspire a lot more companies to start doing business, which could drive the market up in a big way.
The only thing that’s clear to date is that Zillow will again start purchasing real estate in the coming weeks.
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