Zillow follows OpenDoor

Buy-and-flip strategy is a risky one

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.