How Wall Street is using iBuyers like Zillow to eat up starter homes

By Noah Buhayar, Patrick Clark and Jordyn Holman | Bloomberg

Zillow Group spent last year aggressively expanding a home-flipping operation designed to make the $2 trillion U.S. real estate market better for consumers until a bad bet on home prices pushed the company to pull the plug.

As it shuts down the operation, Zillow’s efforts to sell off its inventory of thousands of homes have highlighted a little-noticed truth about the business, called iBuying. The tech industry’s attempts to simplify the process of selling a house depend on flipping properties to some of the biggest names in global finance.

A Bloomberg News analysis of more than 100,000 property records shows that Zillow and the two other biggest iBuyers, Opendoor Technologies and Offerpad Solutions, are selling thousands of homes to landlords backed by KKR & Co., Cerberus Capital Management, Blackstone, and other large institutions. In many cases, those properties are never even listed, further squeezing average buyers out of competitive housing markets.

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Two out of 10 homes flipped by the iBuyers last year wound up with investors and other entities, and the rate is double that in some Sun Belt metro areas, where the companies are most active. What’s more, in some of those markets, the flips are happening at a higher rate in communities of color.

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The transactions raise questions about the role the iBuyers are playing in a housing market starved of affordable properties, both for rent and purchase. A diverse range of U.S. political voices, from the Biden Administration to the conservative television host Tucker Carlson, have blamed …read more

Source:: Los Angeles Daily News

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