LAS VEGAS (KTNV) — Housing prices reached an all-time high in September in the Las Vegas valley at a record average of $406,500, helped in part by iBuyers like Zillow offering quick and easy ways to sell a home online.
Daniel Mahabir, Las Vegas realtor with the Mahabir Realty Group, said Zillow was active in Las Vegas buying, renovating, and selling homes before their decision to eliminate their company's online buying arm "Zillow Offers" in response to financial losses.
"The simplest way we can put it, they were home flippers," he said.
Mahabir said people were attracted to Zillow to avoid the hassle of dealing with a traditional real estate agent.
"They very quickly, because of their platform, became the number two largest iBuyer out here in Las Vegas," he said, "and then this year, all of that blew up in their face."
Mahabir said as recently as August and September he and other realtors were looking at Zillow purchases in confusion as the company paid what they considered to be well over market value for homes based on the Zestimate algorithm Zillow used to give preliminary valuations for homes.
"We were seeing a lot of agents wondering, what is going on here? This is just not making sense," he said.
A Zillow representative, Matt Kreamer, admitted, frankly, that Zillow simply paid too much for the homes they had been purchasing, and that's one of the main reasons the company cut the Zillow offers program and halted buying new homes.
Kreamer blamed pandemic-driven market volatility as the primary reason Zillow couldn't follow the market and make projections about value in three to six months with any significant accuracy.
Even with Zillow and what Mahabir called their too-high purchase prices out of the Las Vegas housing business, both Mahabir and Kreamer agreed the cooling but still-hot housing market in Las Vegas largely wouldn't be affected.
Mahabir said most of the slowing in housing cost increase has been caused by interest rates rising, and the sparse housing inventory in Las Vegas continues to be the main driver behind skyrocketing housing costs.
"It's not necessarily that prices are going in an opposite direction," he said. "In order for that to happen, we would need to see a massive influx in inventory."
Kreamer added Zillow currently has 68 homes for sale in Las Vegas and a handful of others that still need renovation before they can be put onto the market, and all iBuyer services make up for just 4% of the total housing market in Las Vegas.
Kreamer said Zillow is in no rush to sell the homes at a massive loss despite ending the Zillow Offers program calling their approach a "wind-down" expected to take six to nine months.
The Zillow representative dismissed reports that the company would offload the majority of their roughly 7,000 U.S. homes to investors instead of individual buyers to quickly recoup their costs saying the homes were a substantial investment and it would take time to offload them.