On October 18, 2021, Zillow announced that they were no longer buying homes for the remainder of the 2021 year citing labor and supply issues in the market have created an 'operational backlog for renovations and closings.' ¹
"The company acquired more than 3,800 homes during the second quarter, following an expansion of the Zillow Offers program in 2018, but today, can’t work quickly enough to satisfy an insatiable demand from consumers."²
"The pause will last at least through the end of 2021 while Zillow works through its backlog of properties that already have contracts signed and require any renovations. During this time period, Zillow will keep marketing and selling homes through Zillow Offers."³
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Zillow Chief Operating Officer Jeremy Wacksman said in a statement. “We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings. Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory.” Prospective sellers instead will be connected with a local Zillow Premier Agent partner.⁴
Following the news, "Zillow shares dropped as much as 11.4% to $83.54 in New York, the biggest intraday slide in more than seven months. The stock had slipped 31% this year through Friday’s close after nearly tripling in 2020. Shares of Opendoor, one of Zillow’s competitors, jumped as much as 7.9% to $25.27 after the company said it was “open for business.”
Following the news, Zillow shares took a 6% down-turn in premarket trading on Monday. As of Friday's close, the stock had declined 31% YTD. Mike DelPrete told the Wall Street Journal that "because of the Zillow's market power and huge amounts of data at hand, it. has the ability to essentially plan out its inventory and acquisitions in advance, sapped up or slow down business as needed."⁵
No other iBuyers, such as Opendoor and Offerpad, have made any decisions to halt on purchasing homes. In fact, a spokesman for Opendoor emailed a statement to Inman saying, “We know how important certainty and convenience are to homeowners seeking to move and we’ve worked hard over the past seven years to ensure we can continue to deliver our experience at scale. Opendoor is open for business and continues to scale and grow.”
¹ Foreman, Lara. (2021, October 18). Zillow Gets Outplayed at Its Own Game. Wall Street Journal. Retrieved October 19, 2021, from Source.
² Ibid.
³ Ibid.
⁴ Foreman, Lara. (2021, October 18). Zillow Gets Outplayed at Its Own Game. Wall Street Journal. Retrieved October 19, 2021, from Source.
⁵ Clark, Patrick. (2021, October 17). Zillow Pauses Homebuying as Tech-Powered Flipping Hits Snag. Bloomberg. Retrieved October 19, 2021, from Source.
⁶ Foreman, Lara. (2021, October 18). Zillow Gets Outplayed at Its Own Game. Wall Street Journal. Retrieved October 19, 2021, from Source.
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