Zillow started their ‘Coming Soon’ feature in the summer of 2014, so by now the gimmick is maturing. Agents have worked every angle of it, and consumers have seen it all too. Everybody comes to their own conclusions.
Here’s how one consumer described it to me yesterday:
Interesting tactic. Post a ‘Coming Soon’ sign for two weeks and then drop it on to the MLS when it doesn’t sell.
Makes me immediately think the price is too high. Couldn’t get it sold as a “Coming Soon”, so now trying the traditional way.
It looks over priced especially after the pictures.
The listing agent could have been playing it straight and was really holding back all buyers until the house was ready, but who would know? The consumer’s conclusion is that it must be over-priced – is that in the seller’s best interest?
Consumers have never been so skeptical of agent tricks, and are jumping to their own conclusions. Because agents don’t define their Coming Soon strategy, the rest of us just assume there is none, or the agent is just shopping for his own buyers before MLS input.
A tactic like this burns up any urgency there might be for the home – the necessary ingredient for it to sell for top dollar. Buyers don’t feel the need to step up because the house isn’t on the open market. Then once the listing is inputed onto the MLS, those who saw the failed Coming Soon campaign are rewarded for their patience – and will likely wait longer.
The ‘Coming Soon’ campaigns are good for one thing:
The listing agent occasionally pocketing both sides of the commission, while ignoring their fiduciary duty to their sellers.
This post was generally positive about Zillow’s future, but a commenter left this remark about Zillow puffing their counts:
Interesting that you repeatedly quote ‘according to management’ – did it cross your mind that Zillow management exaggerate performance with over stated Average Monthly Unique Users?, or how they use EBITDA instead of GAAP for earnings so that $114M of share based compensation is excluded?
The 152M ‘Average Unique Users’ in Q4 reported by Zillow is substantially overstated compared to 83.2M MUU’s reported by Comscore (http://bit.ly/2G7Zc6V). Even Zillow admits they duplicate MUU’s with the following statement buried in the SEC Form 10-Q Filing:
“Measuring unique users is important to us because our marketplace revenue depends in part on our ability to enable real estate, rental and mortgage professionals to connect with our users, and our display revenue depends in part on the number of impressions delivered to our users. Growth in consumer traffic to our mobile applications and websites increases the number of impressions and clicks we can monetize in our marketplace and display revenue categories. In addition, our community of users improves the quality of our living database of homes with their contributions, which in turn attracts more users.”
“We count a unique user the first time an individual accesses one of our mobile applications using a mobile device during a calendar month and the first time an individual accesses one of our websites using a web browser during a calendar month. If an individual accesses our mobile applications using different mobile devices within a given month, the first instance of access by each such mobile device is counted as a separate unique user.”
“If an individual accesses more than one of our mobile applications within a given month, the first access to each mobile application is counted as a separate unique user. If an individual accesses our websites using different web browsers within a given month, the first access by each such web browser is counted as a separate unique user. If an individual accesses more than one of our websites in a single month, the first access to each website is counted as a separate unique user since unique users are tracked separately for each domain. Zillow, StreetEasy, HotPads, Naked Apartments and RealEstate.com (as of June 2017) measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics (formerly called Omniture analytical tools)”.
Another interesting aspect of Zillow is how a handful of Investors control 60% of the shares and even when Executives dump huge amounts of shares the share price goes up. Are these investors acting in concert with the executives? so that there are buyers in the market knowing that executives are bailing out? Take a look at the major institutional investors and consider how easy a stock like Zillow can be manipulated by relatively small purchases in the market.
Finally, Zillow is a consistently Loss Making business with $443M in accumulated Losses in the 6 years since its IPO and losses of $149M in 2015, $107M in 2016 and $94M in 2017. Put that in context of Facebook making a massive investment in Real estate and Redfins growth substantially higher than Zillows and you have to question the long term viability of Zillow whose business model is to incrementally increase costs greater than the additional revenue generated.
Full Disclosure: I am a Zillow cynic who takes issue with Zillow imposing inaccurate Zestimates on millions of homes and refusing all reasonable requests to correct the erroneous valuation despite fundamental flaws in the proprietary Zestimate algorithm.
This week we had 100+ new listings for the first time since July, and the number of pendings has increased from 280 to 339 over the last month. Here is the breakdown of how the action has improved in the last 30 days:
NSDCC Detached-Home Listings Under $1,000,000
Date
# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
39
$461/sf
20
73
Mar 12
60
$434/sf
19
87
$1,000,000 – $1,500,000
Date
# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
117
$487/sf
46
106
Mar 12
126
$475/sf
43
109
$1,500,000 – $2,000,000
Date
# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
118
$566/sf
52
57
Mar 12
131
$602/sf
53
67
Over $2,000,000
Date
# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
379
$1,004/sf
107
63
Mar 12
406
$1,017/sf
99
89
The Over-$2,000,000 market had a 41% increase in pendings in the last 30 days!
This week at SANDAG (the county’s regional transportation board), we heard for the first time the amount of housing the state is proposing for our county in the next eight-year housing cycle. I hope you’re sitting down – it’s 21,000 new homes annually, which is more than three times the 7,000 homes that San Diego County is currently producing each year.
The total number countywide is 171,685 housing units for the 2021-2028 housing cycle. Each city’s allotment from the California Department of Housing and Community Development (HCD) won’t be determined until 2019, as the proposed methodologies are still in draft form. Once SANDAG assigns Encinitas our new housing numbers, scheduled for October of 2019, Encinitas will have 18 months to update our housing plan for state approval.
Interestingly, only four of the 10 largest metros in the study – Washington D.C., Seattle, Austin and Denver – are considered overvalued. This indicates that despite the growth in home prices in metros like San Diego and Boston, other economic factors such as low unemployment, people choosing to rent, and access to high-paying jobs, have kept these regions within the normal range.
Giorgio has worked his tail off for four years to bring his documentary film to fruition, and now it’s set to debut at the largest doc-film festival in the world!
The Full Frame Documentary Film Festival is an annual international event dedicated to the theatrical exhibition of nonfiction cinema. Each spring, Full Frame welcomes filmmakers and film lovers from around the world to historic downtown Durham, North Carolina, for a four-day, morning-to-midnight array of nearly 100 films, as well as discussions, panels, and Southern hospitality. Set within a few city blocks, the intimate festival landscape fosters community and conversation among filmmakers, film professionals, and the public.
I have seen the film, and for the most part, we (me and fam) play a smaller role. As the filming evolved, the story turned more toward the injustice of the government’s post-war housing policy, and the effects on society today. It is a fascinating movie, and I am grateful to have been a part of it.
Note the train tracks to the left – just 45 trains per day!
John Hood and his wife Sally have bought a $21.5 million mansion on an oceanside bluff in Del Mar in the county’s most expensive real estate transaction since 2007.
You may recall Hood’s name from headlines in January, when news broke that his stealth life science company, Impact Biomedicines, was acquired by pharma giant Celgene for $1.1 billion up front in a deal that could max out at $7 billion.
Hood’s story is one of perseverance as he worked on the key drug in the deal for more than a decade with two companies. The drug, fedratinib, was near final approval back in 2008 only to be halted by the FDA when safety concerns emerged.
The company was sold, and Hood eventually founded Impact and raised more than $100 million to buy the rights to the drug and continue development.
The Del Mar estate was built over eight years for former activist investor David Batchelder, who along with Ralph Whitworth in 1996 founded the local investor activist firm Relational Investors.
They grew the firm to more than $6 billion in assets before Whitworth contracted throat cancer, and in 2014 they began divesting the firm. Whitworth died in 2016. Batchelder never spent a night in his dream home; he is retired and living in Pennsylvania with his wife.
Among Whitworth’s legacy is a $10 million gift to fund cancer research at UC San Diego and the La Jolla Institute for Allergy & Immunology. Another is putting together the Rolling Stones’ 14-song private show at the Belly Up in Solana Beach prior to the band’s 2015 appearance at Petco Park.
Given that prices are so much higher than they were 5-6 years ago and we’ll still have some late-reporters, it is astonishing that last month’s sales were this close to the six-year average of 170.
Year
Number of Sales
Avg. $$/sf
Median SP
Avg DOM
2013
188
$399/sf
$887,500
74
2014
180
$487/sf
$927,500
58
2015
171
$519/sf
$1,110,000
63
2016
150
$564/sf
$1,150,000
54
2017
173
$508/sf
$1,265,000
52
2018
161
$572/sf
$1,265,000
38
New February records in pricing and average days-on-market, and that’s with no duplicate listings included. If we take out the whopping $3,452/sf from the big-bomber featured above, the average for the month was still $550/sf.
