Zillow, one of the many real estate
websites, people go to to find
listings of available homes.
Is now trying to offload thousands
of homes it bought during
the pandemic when there was this
massive home buying bonanza.
Now why,
why would they want to do this?
Obviously because they're losing
money with this real estate
that they now have possession of,
which just let that sink in for
a second okay?
Zillow managed to lose money in
the housing market,
when the housing market is doing
tremendously well for people who
have the capital to buy houses,
they're losing money.
I mean if that's not a fail, like
the biggest fail in business for
the year probably, but
let me give you the details.
This is what happened.
So in August there was an arms race
among tech companies that were
trying to buy up as much real
estate as possible, as housing
prices exploded across the country.
Zillow bet big, telling investors
that it planned to buy thousands of
houses throughout 2021 and turn
its Homes division into a billion-
dollar business.
So we've seen this happen with a
number of massive companies, right?
So they'll buy up single family
residences and they'll either flip
those homes or as private equity
firms have showed us, they'll turn
them into rentals to essentially
corner the rental market.
In this case,
Zillow was planning on doing
this mass flipping operation right?
Where they'll buy a bunch of homes,
they'll like spit on some tile and
put it up on a wall and
then they'll sell it for
an insanely inflated price.
Well, apparently they didn't really
think this through.
So as a result, as the summer came
to an end though,
it seemed like Zillow's offers
business was also cooling down.
In October, the company told
investors that it would stop
buying houses citing construction,
renovation and
closing labor shortages.
Now Bloomberg, however,
speculated that it could also be
motivated by excess inventory and
reported that Zillow seemed to
sell a good number of houses at
a loss instead of a profit.
So what is Zillow planning to do
now?
Now, Zillow is looking to offload
around 7000 of the homes it bought.
Now there's a twist to this story
that isn't so great, but
let's just take a moment to really
absorb what we've learned and
celebrate it because I love seeing
them fail in this regard.
Because what Zillow and other
companies like Zillow are doing,
in order to maximize their profits
of course, is there taking housing
out of an already limited inventory
of homes.
And I know that we're in such
an awful economic situation that
most working people in this country
already had difficulty affording
homes, buying their own properties.
However, when you really think
about it, the only vehicle in which
middle class Americans or
working Americans could
build wealth in this country,
was through homeownership.
And these kind of companies,
including private equity firms have
made it more and more difficult
throughout the years, for
that vehicle for wealth building to
come to fruition.
And that enrages me almost more
than any other issue
in the country right now,
because there's a domino effect.
It's also led to an increase of
people within the rental market and
you look at rental prices and
they've shot up as a result, right?
Because again, there's limited
inventory in both the housing
market where you can purchase homes
and also the rental market.
Now, what is the negative twist
to the story?
Here it is,
the company is trying to
sell the homes to you guessed it.
Institutional investors
like Wall Street firms to the tune
of 2.8 billion dollars.
Investors made up about 20%,
that's 1/5, 20% of the home- buying
market in 2020, and Zillow says
that it and its competitors made up
around 1% of the housing market in
the Q2 of 2021.
A fifth of the housing market
is a massive and influential chunk,
and it absolutely is.
There's no other way of putting it.
And this trend of institutional
buyers okay?
So the private equity firms,
the black rocks and all of that,
they were really empowered by
the policies that were passed under
the Obama administration.
So when we talk about the lopsided
economic recovery following
the 2008 recession.
That was very much the result of
policies that put Wall Street
first, that prioritized the best
interests of Wall Street while
essentially screwing over ordinary
Americans, who should have received
some sort of relief.
So their homes weren't foreclosed
on, but that's not what happened.
So, by 2016,
as a result of Obama era policies,
95% of the distressed mortgages on
Fannie Mae and Freddie Mac's books
were auctioned off to Wall Street
investors without any meaningful
stipulations.
And private- equity firms had
acquired more than 200,000 homes in
desirable cities and middle class
suburban neighborhoods, creating
a tantalizing new asset class,
the single- family- rental home.
And the numbers have just gotten
worse and we see it play out in
the housing market.
All of us notice it.
So over the next seven years, so
starting in 2016 and over the next
seven years, I'm sorry.
Yeah, strategic acquisitions
culminated into Blackstone
subsidiary invitation Homes,
making Invitation Homes,
the largest single family rental
company in America.
And with almost 80,000 homes
after Blackstone sold its shares at
the end of 2019.
Okay, so think about the number of
homes just this one private equity
firm has, and it's just one, you're
seeing copycats popping up doing
the same thing that Blackstone is
engaging in and it's a disaster.
It's an absolute disaster for
the housing market.
It's an absolute disaster when you
consider the already limited
inventory of houses and
there's nothing being proposed by
democrats by the way, who are in
power right now to mitigate this.
Absolutely no regulations, no
policies, because when it comes to
neoliberalism, the government only
intervenes on behalf of moneyed
interests, but never on behalf of
ordinary American workers.
And that's just how the system
works.
So when democrats are curious as
to why people hate them so much and
why they're losing so much support
among the working class.
It's because this kind of garbage
happens under
their watch due to some
of the policies that they pass, and
they just completely ignore
the issue as if it doesn't exist.
So, can you understand the rage in
the country as a result?
I know I can.