Zillow has paused its home buying activities as its iBuying division works through a backlog of homes already on the Seattle-based real estate giant's books.
In an emailed statement seen by Bloomberg, Zillow confirmed that it would be concentrating on clearing properties already purchased through its Homes iBuying division:
"We are beyond operational capacity in our Zillow Offers business and are not taking on additional contracts to purchase homes at this time."
"We continue to process the purchase of homes from sellers who are already under contract, as quickly as possible."
The company's iBuying division (known as Zillow Homes) began purchasing and renovating homes in 2018 but apart from one quarter at the start of the pandemic, when it was forced to sell more homes than it bought, the business has not made a profit.
According to industry commentator Mike DelPrete, Zillow's rivals Offerpad and Opendoor (excluding stock-based compensation) both made a profit on their iBuying activities in Q2 with much of the recent uptick in iBuying's financial fortunes attributable to house price appreciation rather than operational gains.
iBuying as a model has been in the news a great deal recently as it was revealed that Zillow has started using bond offerings to fund its home buying operations and that Zillow's main iBuying rival Opendoor has increased its borrowing capacity to $9 billion.
It's not just in the financial publications that Zillow and iBuyig in general have been making headlines. In September a viral video in which one Nevada based realtor speculated that iBuying could lead to artificial home price inflation generated a lot of feedback on social media and even prompted Zillow and Redfin to respond to deny the video's insinuations.
Zillow has bet big on iBuying and this temporary pausing of its house buying comes as something of a surprise given that it has been looking to expand the local markets in which it operates and is more confident than ever in the Zestimate algorithm behind the offers it makes.
The news comes hot on the heels of several other pieces of news that might be worrying CEO Rich Barton. The FTC recently confirmed that it is investigating Zillow's $500 million acquisition of showing management firm ShowingTime and just last week Zillow's rival CoStar announced that it has signed a deal to build a new public facing portal to rival StreetEasy in New York.