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Zillow’s unexpected announcement in October that it was temporarily pausing its home-buying activities raised many analysts’ eyebrows. Now, the company is reportedly offloading thousands of homes at a discount, Marketwatch recently reported.
It also announced it would lay off 25% of its workforce over the next few quarters.
Some argue that more concerning trends could be on the way. The company’s Zillow Offers division—what’s known as an “iBuyer”—purchases and sells homes directly to consumers, typically renovating them in between.
Following a report in mid-October from Bloomberg, Zillow confirmed that its Zillow Offers division would not be signing any additional new contracts to purchase homes through the end of 2021.
In explaining the move, Zillow said the company was facing a backlog of renovations and dealing with operational-capacity issues.
Now, though, Bloomberg is reporting that the company is selling off roughly 7,000 homes, looking to claw back $2.8 billion in the process. A separate report from KeyBanc analyst Edward Yruma found that two-thirds of the homes Zillow has listed for sale feature an asking price below what Zillow paid for the property, with the average discount being 4.5%.
“Zillow may have leaned into home acquisition at the wrong time,” Yruma wrote in a research note.
When asked to comment on the sale, Caliber’s co-founder & CEO, Chris Loeffler responded, “Zillow had it, the brand, the capital and the access to win this race at scale. What they didn’t have, and you cannot replace, is the proper balance of local, specialized knowledge and flexibility to move with the market. Technology can enable better real estate investing. What it cannot do is replace a world-class local team that realizes each property is unique.”
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Are you interested in learning more about Caliber’s private equity real estate (PERE) funds? Investors looking to diversify their portfolios with real estate should fill out the form below and we’ll contact you as soon as possible to discuss with you our offerings and their benefits on your portfolio.
As the Wealth Development Company, we are a leading U.S. sponsor with approximately $500 million in assets under development and management. These investments are comprised of alternative investments, which include private funds and syndications, externally managed real estate investment trusts (REITs) as well as public funds. We conduct substantially all business through our Sponsor, CaliberCos Inc., a vertically integrated platform that is strengthened by more than 70 professionals with decades of institutional experience in commercial real estate, capital markets, alternative investments, and mergers and acquisitions.
We allocate our alternative investment strategies and align them with investors’ investment objectives, risk profiles and liquidity preferences to offer an optimal balance of risk-adjusted returns and attractive investment performance. It is because of this thoughtful, intentional approach, and our unwavering pursuit of performance, that we have been deemed The Wealth Development Company.
We strive to build wealth for investors by offering a diverse host of investment solutions that fit our investors’ needs. With a primary focus on key middle-market growth areas, such as Arizona, Colorado, Nevada, Texas, Utah and Alaska, we evaluate other U.S. markets that possess the same attractive demographics and macroeconomic trends as our targeted markets, such as highly skilled labor, emerging population and job growth. In addition, we utilize our institutional full-service operating platform to generate operating efficiencies while enhancing the value of our investments through dedicated asset management strategies.
We create value through a combination of internal and external growth channels. Bringing together the benefits of real estate, deep asset-class, and capital markets expertise across public and private investments. We seed, develop, and manage a broad range of liquid and illiquid alternative strategies for a diverse group of investors who comprise approximately a $4 trillion alternative investment market, which includes high net worth, accredited and qualified investors, as well as family offices and smaller institutions. This strategy allows us to opportunistically compete in an evolving middle-market arena for alternative investments that range between $5 million and $50 million.
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If you would like to speak to someone about diversifying your retirement accounts, contact us at [email protected] or call (480) 295-7600 to schedule a call with a member of our Wealth Development Team.
The information contained herein is general in nature and is not intended, and should not be construed, as accounting, financial, investment, legal, or tax advice, or opinion, in each instance provided by Caliber or any of its affiliates, agents, or representatives. The reader is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances, desires, needs, and requires consideration of all applicable facts and circumstances. The reader understands and acknowledges that, prior to taking any action relating to this material, the reader (i) has been encouraged to rely upon the advice of the reader’s accounting, financial, investment, legal, and tax advisers with respect to the accounting, financial, investment, legal, tax, and other considerations relating to this material, (ii) is not relying upon Caliber or any of its affiliates, agents, employees, managers, members, or representatives for accounting, financial, investment, legal, tax, or business advice, and (iii) has sought independent accounting, financial, investment, legal, tax, and business advice relating to this material. Caliber, and each of its affiliates, agents, employees, managers, members, and representatives assumes no obligation to inform the reader of any change in the law or other factors that could affect the information contained herein.