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Well-known real estate app won’t buy more houses this year

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  • A well-known real estate app will stop buying houses this year.
  • The company announced that it currently has a large backlog of properties.
  • The shortage of workers and supplies affects the real estate market.

Real estate website Zillow announced that it would stop buying and renovating homes until the end of the year, as it currently has a large backlog of properties and deals with labor and supply shortages.

“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Jeremy Wacksman, Zillow’s chief operating officer, said in a statement.

Market problems

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“We have not been exempt from these market and capacity problems and now we have an operational backlog for renovations and closures,” he added.

Through its Zillow bargain program, the company buys homes directly from sellers, completes necessary updates, and puts them up for sale. This allows sellers to avoid having to do repairs or set up displays themselves, the company says.

No more house purchases

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Zillow, which is known for its online real estate listings, told shareholders that it purchased 3,805 homes through the program in the second quarter of this year, a significant increase from previous years. Zillow Offer, which launched in 2019, sold 2,086 homes and grossed $ 71 million during the same period.

The company announced Monday that it would not sign any new contracts to buy houses until the end of 2021. Zillow said it would still market and sell houses through the program and would also continue to buy houses with contracts they already have. It has been signed but has not yet closed.

The impact of the pandemic

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The construction industry was one of many hard hit by the COVID-19 pandemic, which saw the cost of building materials skyrocket. Meanwhile, the demand for homes, as well as their price tags, has increased.

While the astronomical prices of wood have declined since their recent highs, other materials such as steel and pipes remain expensive or in short supply. On top of that, there is a severe shortage of construction workers.

A market that does not take off

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Both new home construction and building permit authorization fell in September compared to the previous month, according to the US Census Bureau.

In an interview with the Marketplace Morning Report last month, Associated Builders and Contractors economist Anirban Basu said the coronavirus was still causing problems in the housing industry. “The spread of the delta variant globally has increased supply chain problems. It means higher prices for inputs; it raises the cost of providing construction services, ”said Basu.

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