Anything can be done online. Some tech companies, like Zillow and Redfin, think they can even buy and sell houses online, and are dreaming of becoming the Amazon of what has come to be known as ‘‘iBuying.” But they’re finding out that buying and selling assets worth hundreds of thousands of dollars is a bit harder as an online industry than buying and selling books.
Last week, Zillow made a startling announcement that it would stop buying homes for the rest of the year, self-reportedly due to a “backlog of renovations and operational capacity constraints” that it blamed on the supply chain issues plaguing the economy.
This news made a splash in the world of iBuying, a relatively new industry in which companies like Zillow, Redfin, OfferUp, and Opendoor allow homeowners to avoid the tedious process of listing and staging homes by selling directly (and quickly) to them. But it also caught traction on TikTok where Sean Gotcher, a Las Vegas real estate agent, posted a video with Zillow’s news laughing at the company’s troubles.
Gotcher had already achieved the sort of brief internet fame one can most easily get on TikTok when he posted a video in September that has now received more than 3 million views. In it, he insinuates that iBuyer companies are manipulating the market by intentionally overpaying for some homes in order to sell others that they’ve already bought in nearby areas for a higher price.
While some of Gotcher’s claims are far-fetched and verge on conspiracy theories (and since real estate agents directly compete with iBuyers, you should take claims either entity makes about the other with a grain of salt), the video went viral because it struck at the heart of a growing fear that housing is becoming less like shelter and more like a risky financial asset traded on Wall Street. This anxiety is not new but has become electrified over the course of the pandemic as a hot housing market and a historic undersupply of housing have locked out young and first-time homebuyers. Earlier this year, fears that BlackRock and other institutional investors were responsible for current market conditions were rampant despite a lack of evidence for the claim.
iBuyer companies make up a very small share of the market — roughly 1 percent of home sales in the second quarter of 2021, at what is their peak so far — but it’s important to take concerns about their growth seriously. While iBuyers contend that they are offering a clear solution to reducing the stress of the home-selling process, US policy has predicated financial security on homeownership, …….