WSJ has more delicious bits

“It feels like this would be a hard time to lose money buying and selling houses,” said Benjamin Keys, professor of real estate at the Wharton School of the University of Pennsylvania. “This is a time frame where prices have gone up in a lot of places, dramatically.”

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” Mr. Barton said.

The move represents a big hit to Zillow’s top line. Home-flipping was the company’s largest source of revenue, but it has never turned a profit.

From Seeking Alpha:

"We went into the business as a big swing on the bet that we could accurately predict the price of a home six months into the future, and what happened was... COVID happened," he later told CNBC.

So... 'cuz of this

I read two thirds of Scott Galloway's piece of shit book. If you want to know what cloistered Manhattan liberal business professors thought of COVID in August of 2020, Scott's got ya covered. Why two thirds? He starts out with some interesting statistical arguments that between March and July 2020, business trends accelerated 10 years. Telemedicine? 10 years down the trendline. Online shopping? 10 years down the trendline. "Innovation?" 10 years down the trendline.

Problem is? He presumes that there were no exogenous shocks to the system from a global fucking pandemic. He whips out that "weeks within decades" saw that Lenin never said and then ignores that whole October Revolution thing the quote refers to. So all his extrapolations are basically "invest as if it's ten years in the future and absolutely nothing has happened that is going to cause anyone to reconsider anything anywhere ever."

Traditional economics assumes a certain inelasticity of demand. A constancy of want. Galloway goes as far as surmising that any couple spending March-July together experienced ten years of mileage on their relationship, for better or worse, and any employee ten years of employment... and gets as far as recognizing that's make-or-break on every level... but then doesn't even acknowledge that ten years of shock might just break his model.

and what happened was... COVID happened," he later told CNBC.

So Zillow had a model that they thought gave them an edge over the wankers on their marketplace. This is very much like Amazon using Amazon data to make better Amazon products to compete against the stuff they sell from other vendors, but whatever. Fundamentally?

I get 200pp of graphs every morning. One of the greatest insights it has given me is that there's leading indicators and there's trailing indicators. Nobody ever breaks this out. It's just data in every analysis. But if you look at it, half of it is "here's what we saw" and the other half is "here's what we're seeing."

If you can't tell the difference, your "here's what we saw" model will be used to guess what you're going to see. And if things are steady-state, it might even work for a while.

Steady state is on hiatus.