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Zillow follows OpenDoor

Buy-and-flip strategy is a risky one

Zillow co-founder Rich Barton and CEO Spencer Rascoff.
(Credit: Steve Ringman / The Seattle Times)

Zillow is expanding its instant offer home-buying program to Riverside County, California. This will be their eighth market nationally

The Backdrop: Zillow witnessed the success of OpenDoor and wisely followed suit. The company invested around $150 million in around 600 houses this past year. House-flipper Opendoor raised $400 million from SoftBank at a valuation north of $2 billion. It was a matter of time before Zillow got in on the party.

Takeaway: With home prices at record highs coupled with rising interest rates, economists believe that the market is nearing its peak. This buy-and-flip strategy of Zillow, OpenDoor, and Redfin risks significant exposure to a downturn.

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