While I was happy to see Zillow officially announce that is getting out of the home buying business, it is unfortunate that it will result in a reduction in their employees. The reason I felt good about another iBuyer dropping out of the market is that it should continue to contribute to a rebalancing of supply and demand.
We have been in an unprecedented seller’s market that has pushed many potential buyers to the sidelines. Although iBuyers are a small fraction of the market, I do believe they have made a difference in supply and demand (at least in some areas).
Also, it shouldn’t surprise us that Zillow didn’t see a long-term path to profitability with iBuying. Home buying and selling is intensely local, with each property having its unique benefits and costs. Just having a solid price algorithm and good balance sheet didn’t provide the competitive advantage they needed to make better decisions than savvy local buyers and operators.
I believe Zillow’s decision will have ripple effects on the iBuying industry. That doesn’t mean that it will go away. However, it hopefully means that iBuying won’t be on this rapid, continuous path to becoming a larger percentage of overall real estate transactions. Here’s to you getting into your next home when you are ready to do so.