Zillow Treats The Housing Market Like Its a Game

Zillow's news articles are SOOO bad they release them on everyone else's website but their own. How do they do that?

Before we get into that, let's, as always, start with the data.

Mortgage rates were a sea of calm compared to the bond market drama, with rates closing the week at 6.38%, a lower for the month and almost 0.75% below the highs of 7% just a few weeks ago.

Inventory: nationally, housing stock continues at record lows for periods other than during the Pandemic, and has declined to match the rates of 2021. As I have repeatedly said, as long as inventory is low prices cannot go down much.

Locally, in Los Angeles, the market continues to be a seller's market, holding at a market action index of 40, slightly less of a seller's market rating than last month's 41.

A better way to understand inventory than comparing current inventory to the last two years is to compare it to the pre-COVID period. Here is a chart from Redfin that shows that while inventory is much higher than in the last 2 years of the COVID era, it is still easily a record low for as long as we have data to compare.

The news industry is so starved for news and attention that they will take a minor statistical anomaly and attempt to make it significant. Here the Orange County Register writer Jon Lansner tweets that home prices are off their record by 18%, but when you look at the graph you will see that housing prices are still so much higher than at any time in history it is breathtaking.

I found it stunning that the Mortgage Bankers Association (MBA) released its updated Mortgage Forecast, and it seems to have been ignored. I suspect it either because it has been wrong so many times that no one takes it seriously or that its current projections are not wild enough to stand out in the noise of the press.

One news reporter that puts out a lot of interesting ideas is Lance Lambert of Fortune Magazine. This week he shared an amazing graph that suggests that housing rises about 400% in a decade and suggests that maybe we got all the appreciation for this decade already.

Another interesting piece of info I saw last week was from First American's Chief Economic Odeta Kushi where she shows how much homeowner equity has risen and still remains even after this recent correction.

When those of us in California wonder how things got this bad in the housing market, you can point fingers at the government, but as a member of the California Association of Realtors, I have to say with shame we have been complicit with the government actors. Here is a perfect example. Governor Newsome issued in State of the State letter last week, and in it he failed to mention the affordability or availability of housing in the state. As if that's amazing, this is topped by CAR which responded to him with the following: "...it’s critical to support policies that create pathways to homeownership." So, the CAR wants to work with the government to create pathways. Pathways, what is that? How about building more housing to keep up with the population growth? Is that not obvious? What does building "pathways" do if there are no more homes to buy?

Runner up for this week's misleading headline is Redfin, with their entry "The Typical Down Payment Has Fallen 10% From A Year Ago As Housing Market Cools." Now, this is true, as the average down payment has dropped to 10% from 14% a year ago. But, again, the last 2 years were during a historically different period where people literally moved to change their lifestyle in record numbers. When you look at the chart that Redfin provides, you can see this reduction is moving back toward the historical norm.

But the winner this week is, again, regular contender, Zillow.

This week, Zillow released a press release titled "Buyers are in the game, but interest rates are keeping sellers on the bench." 

So, think about this, what does it mean? For every sale, there is exactly 1 buyer and 1 seller, that's how sales work. There is exactly the same number of both. When there are more potential sellers than buyers, the price is pressed to go down, and the reverse is true, but the market always responds when one of each comes to terms. That's how it works. 

So, how do sellers stay on the bench buy buyers are in the game?

What is interesting is that this press release is given out to news organizations, and many reprint it, but Zillow does not put it on its public-facing blog. Curious, why? Could it be its just filler? Could it be that even Zillow knows this is nonsense?
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Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents national probate experts.

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