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Zillow Bet BIG and LOST and Now YOU'LL Pay - YouTube
Channel: The Young Turks
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zillow one of the many real estate
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websites people go to to find listings
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of available homes is now trying to
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offload
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thousands of homes it bought during the
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pandemic when there was this massive
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home buying bonanza
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now why why would they want to do this
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obviously because they're losing money
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with this real estate that they now
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have possession of
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which just let that sink in for a second
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okay
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zillow managed to lose money
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in the housing market
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when the housing housing market is doing
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tremendously well for people who have
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the capital to buy houses
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they're losing money
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they're losing money
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i mean if that's not a fail like the
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biggest fail in business for
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for the year probably but let me let me
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give you the details this is what
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happened so in august there was an arms
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race among tech companies that were
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trying to buy up as much real estate as
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possible as housing prices exploded
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across the country zillow bet big
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telling investors that it planned to buy
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thousands of houses throughout 2021 and
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turn its homes division into a billion
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dollar business
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so we've seen this happen with a number
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of massive companies right so they'll
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buy up single-family residences and
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they'll either flip those homes or as
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private equity firms have showed us
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they'll turn them into rentals to
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essentially corner the rental market in
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this case uh zillow was planning on
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doing this mass flipping operation right
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where they'll buy a bunch of homes uh
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they'll like spit on some tile and put
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it up on a wall and then they'll sell it
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for an insanely inflated price well
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apparently uh they
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didn't really think this through so as a
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result as the summer came to an end
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though it seemed like zillow's offers
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business was also cooling down in
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october the company told investors that
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it would stop buying houses citing
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construction renovation and closing
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labor shortages
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now bloomberg however speculated that it
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could also be motivated by excess
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inventory and reported that zillow
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seemed to sell a good number of houses
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at a loss instead of a profit
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so what is zillow planning to do now
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now zillow is looking to offload around
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7 000 of the homes it bought
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now there's a twist to the story that
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isn't so great but let's just let's just
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take a moment to really absorb what
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we've learned
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and and celebrate it because i love
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seeing them fail in this regard because
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what zillow and other companies like
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zillow are doing
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in order to maximize their profits of
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course is there taking housing out of an
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already limited inventory of homes
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and
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i know that we're in such an awful
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economic situation that most working
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people in this country already had
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difficulty affording homes buying their
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own properties
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however when you really think about it
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the only vehicle in which middle-class
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americans or working americans could
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build wealth in this country was through
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home ownership
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and these kinds of companies including
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private equity firms have made it more
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and more difficult throughout the years
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for that
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vehicle for wealth building to come to
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fruition
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and that enrages me almost more than any
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other issue in the country right now
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because it's also led to there's a
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domino effect it's also led to an
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increase of people within the rental
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market
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and you look at rent rental prices and
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they've shot up as a result right
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because again there's limited inventory
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in both the housing market where you can
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purchase homes and also the rental
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market
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now what is the negative twist to the
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story
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here it is the company is trying to sell
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the homes to
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you guessed it institutional investors
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like wall street firms to the tune of
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2.8 billion dollars investors made up
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about 20 percent that's one-fifth 20
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percent of the home buying market in
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2020 and zillow says that it and its
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competitors made up around one percent
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of the housing market in the second
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quarter of 2021
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a fifth of the housing market is a
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massive and influential chunk and it
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absolutely is there's no
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other way of putting it
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and this trend of institutional buyers
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okay so the private equity firms the
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black rocks and all of that
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they were really empowered by the
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policies that were passed under the
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obama administration
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so when we talk about the lopsided
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economic recovery following the 2008
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recession
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that was very much the result of
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policies that put wall street first that
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prioritized the best interests of wall
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street while essentially screwing over
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ordinary americans who should have
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received some sort of relief so their
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homes weren't foreclosed on but that's
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not what happened
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so
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by 2016 as a result of obama era
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policies 95 percent of the distressed
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mortgages on fannie mae and freddie
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mac's books were auctioned off to wall
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street investors without any meaningful
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stipulations and private equity firms
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had acquired more than 200 000 homes in
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desirable cities and middle class
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suburban neighborhoods creating a
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tantalizing new asset class the
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single-family rental home
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and the numbers have just gotten worse
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and we see it play out in the housing
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market
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all of us notice it so over the next
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seven years uh so starting in 2016 and
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over the next uh you know seven years
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uh
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i'm sorry yeah strategic acquisitions uh
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culminated into blackstone subsidiary
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invitation homes making invitation homes
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the largest single-family rental company
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in america
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and uh with almost 80 000 homes after
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blackstone sold its shares at the end of
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2019.
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okay so think about the number of homes
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just this one private equity firm has
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and it's just one you're seeing copycats
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popping up doing the same thing that uh
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blackstone is engaging in and it's a
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disaster it's an absolute disaster for
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the housing market it's an absolute
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disaster when you consider the already
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limited inventory of houses and there's
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nothing being proposed by democrats by
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the way who are in power right now to
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mitigate this absolutely no regulations
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no policies
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you know because when it comes to
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neoliberalism
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the government only intervenes on behalf
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of moneyed interests but never on behalf
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of ordinary american workers
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and that and that's just how this system
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works
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so when democrats are curious as to why
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people hate them so much and why they're
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losing so much support among the working
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class it's because this kind of garbage
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happens under their watch
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due to some of the policies that they
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pass
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and they just completely ignore the
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issue as if it doesn't exist
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so can you understand the rage in the
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country as a result
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i know i can thanks for watching the
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