House-flipping companies that ventured to Las Vegas and other cities in the past few years have stopped buying homes because of the new coronavirus.
Zillow Group, which entered the buy-and-sell-quickly business in 2018 with Las Vegas among its first cities, announced Monday that it will “pause” homebuying in the 24 markets where it operates the Zillow Offers program.
The Seattle-based company, best known for its listing site Zillow.com, will still sell homes. However, it said it halted purchasing activity after officials in several states, including Nevada, directed people to stay home or “nonessential” businesses to close temporarily.
It plans to restore Zillow Offers’ full operations “once health concerns pass and local health orders are lifted,” CEO Rich Barton said in a press release.
Other web-based home flippers have also stepped back from buying houses as the coronavirus sparks sweeping closures around the U.S. and sends the economy into turmoil.
Las Vegas could get hit harder than other cities by the fallout from the coronavirus outbreak, given that its main economic engine — tourism — has effectively shut down. Casinos statewide have closed, waves of conventions have been canceled or postponed and many retailers have locked their doors.
There are still plenty of unknowns, including how long businesses will remain closed to contain the virus’ spread. But Southern Nevada’s housing market now faces risky terrain, given the region’s potentially staggering job losses. Real estate pros expect sales to tumble amid the turmoil.
San Francisco-based Opendoor — which said last month that it bought nearly 860 homes in the Las Vegas area last year — told the Las Vegas Review-Journal on Monday that it is “temporarily pausing new instant home offers” because of the public health crisis.
Arizona-based Offerpad said it is “not currently providing offers to new sellers,” and Seattle-based Redfin Corp. has said it temporarily stopped buying homes because of the outbreak.
“With whole cities shutting down nearly all commerce, no one can say what a fair price is right now, so we’re not making any instant offers,” Redfin CEO Glenn Kelman said in a statement, adding that the company expects to resume its offers “only when the market becomes more predictable.”
These so-called instant buyers, or iBuyers, make offers not long after people upload their home’s information online, then try to sell quickly. Redfin said in a securities filing last month that people who sell through its RedfinNow business “typically get less money for their home” than if they had listed it with an agent, but “they get that money faster with less risk and disruption.”
Instant buyers have been more active in Las Vegas than in other markets. According to a report last month from Redfin, iBuyers accounted for 4.1 percent of Las Vegas home purchases last year, compared with 1 percent nationally.
Zillow has said it would own houses for up to 90 days before it unloaded them. Offerpad CEO Brian Bair said last year that his firm sells a home within 100 days of buying it, and Redfin has said that after it purchases a home, it makes “any necessary repairs and updates before it is put on the market to find the next buyer.”
Still, iBuyers have disputed the notion that they’re flippers, citing their tight price spreads and dependence on volume and fees, as opposed to just buying low and selling high.