⚡ Get All Content for 20% Off ⚡

Zillow to Stop Buying New Homes for the Rest of the Year as It Struggles to Manage Backlog in Renovations The company's Chief Operating Officer, Jeremy Wacksman, said in a statement that Zillow will not be signing any new, additional contracts to buy homes through the end of the year.

By The Epoch Times

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Online real estate marketplace Zillow on Monday announced it will stop buying new homes for the rest of the year due to a backlog in renovations and operational capacity constraints.

The company's Chief Operating Officer, Jeremy Wacksman, said in a statement that Zillow will not be signing any new, additional contracts to buy homes through the end of the year but will continue to market and sell homes through Zillow Offers during this period.

Through its Zillow Offers program, the company buys homes directly from sellers and completes all of the necessary upgrades or repairs without the the seller having to host open houses or showings. After buying a home, Zillow prepares it for sale.

Home purchases by iBuyers now account for about 1 percent of the market, according to a report from Zillow.

But due to a shortage of labor and supplies, Zillow can't meet current demands to close, renovate, and resell the homes fast enough.

Wacksman said the temporary pause on purchasing of new homes will allow Zillow to focus on purchasing homes with already-signed contracts that have yet to close, and reduce its renovation pipeline.

"We're operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation, and closing spaces," Wacksman said.

"Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory," he added.

Zillow purchased 3,805 homes in the second quarter this year, marking a record high for the company and more than double the number of homes it bought in the first quarter, CNN reported, citing a note to company shareholders.

The company's pause on its Zillow Offers program, also known as an iBuyer program, appears to be specific to Zillow, according to Mike DelPrete, an independent real estate technology strategist and scholar in residence at the University of Colorado Boulder.

"Zillow just kept barreling down and now they've hit this wall," he told CNN.

"If you're trying to be number one in the market, slamming on the brakes is one of the worst things you can do," said DelPrete. "You want to make some adjustments before you get to that point—slow down, switch gears. This is not the preferred outcome for Zillow."

The company's announcement comes shortly after September research from Realtor.com showed the United States is short of more than 5 million homes, driven by increased housing demand across the country and a lack of materials and workers in the construction industry.

Construction companies were already suffering from labor shortages well before the COVID-19 pandemic began, but have since been plagued with further issues surrounding supply chain management leaving contractors unable to source basic materials, and the skyrocketing prices of building materials, all of which have further exacerbated that preexisting shortage.

Data released on Sept. 9 show that the United States is short of 5.24 million homes, an increase of 1.4 million from the 2019 gap of 3.84 million, according to the U.S. Census.

Between 2012 and June 2021, 12.3 million American households were formed, but just 7.5 million single-family homes were started, and 7 million single-family homes were completed during this same period of time.

Realtor.com noted that if household formations were to continue at the current five-year average, home completions would have to triple production in order to close the gap within five to six years.

However, if household formations were to remain at the same pace while home completions increase, it would only take five to six years to close the gap between the two.

By Katabella Roberts

Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.

The Epoch Times, founded in 2000, is headquartered in Manhattan, New York, with a mission to provide independent and accurate information free of political bias or corporate influence. The organization was established in response to censorship within China and a lack of global awareness regarding the Chinese regime's repression of the spiritual practice Falun Gong.

The Epoch Times is a widely read newspaper that is distributed in 33 countries and is available in 21 languages. The publication has been critical in providing balanced and detailed reporting on major global events such as the 2003 SARS pandemic and the 2008 financial crisis. Notably, the organization has played a key role in exposing corruption inside China.

Aside from its human rights coverage, The Epoch Times has made significant contributions in a variety of fields. It has received praise for its in-depth analysis and expert perspectives on business, the economy and U.S. politics. The newspaper has also received praise for its broad coverage of these topics.

A series of editorials titled "Nine Commentaries on the Communist Party" appeared in The Epoch Times in 2004. It asserts that freedom and prosperity in China can only be achieved by eliminating the Communist Party, which violated China's cultural and spiritual values. In addition, the organization led the Tuidang movement, which resulted in over 400 million Chinese citizens quitting the Communist Party. In spite of this, 90% of websites referring to the "Nine Commentaries" were blocked by the Chinese regime.

The Epoch Times has been at the forefront of investigating high-level corruption cases within the Chinese regime, with its reporters taking significant risks to uncover these stories. The organization has received several awards for its investigative journalism.

The organization has received several awards for its investigative journalism. For more, visit www.theepochtimes.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Business Ideas

55 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.