Seattle-based online home sales giant Zillow announced Monday its home-flipping division would stop buying new homes “in response to local public health orders related to COVID-19 and to help protect the safety and health of its employees, customers and partners.” The company will continue to market and sell the homes it already owns.
Competitor Redfin has also temporarily stopped buying homes because “with whole cities shutting down nearly all commerce, no one can say what a fair price is right now,” CEO Glen Kelman said in a statement last week.
Zillow launched its home-flipping divison — Zillow Offers — in April 2018 and expanded it rapidly. Zillow Offers accounted for $1.37 billion in revenue in 2019, up from $52.4 million a year earlier. Buying homes, refurbishing them and then reselling them is an expensive business. Operating costs for Zillow Offers totaled $1.32 billion last year. Despite razor-thin margins in the business, Zillow bet it could turn a profit by taking a big bite out of the $1.9 trillion home-sales market.
Neither Zillow’s nor Redfin’s home-flipping divisions operate in Seattle. As of March 19, Zillow owned 1,860 homes in Arizona, California, Colorado, Florida, Georgia, Minnesota, Ohio, Oregon, Nevada, North Carolina and Texas. Redfin owns homes in Southern California, Nevada and Texas.
Shares of Zillow have fallen by 54% from their six-month high of $65.59 on Feb. 21. When markets closed Monday, they were trading at $30.06. Redfin shares have fallen by 65% over the same period, trading at $11.96 when markets opened Monday.