Zillow CEO Rich Barton revealed in a letter to shareholders Thursday accompanying quarterly earnings results that the company is likely to resume buying homes through its Zillow Offers platform in a few weeks.
“We are actively planning to restart Zillow Offers homebuying, likely within the next few weeks,” Barton wrote. “There are a number of factors we are considering that will influence the timing of our restart, including one, the health and safety of our employees, customers and partners; two, local orders and public health concerns; three, local housing market factors, and four, confidence in our ability to consistently price and transact.”
Barton, on an investor call, said, internally, the quest to unpause homebuying is dubbed, “Han Solo,” after the Star Wars character, famously trapped in a substance called carbonite.
“Although our time frozen in the carbonite, will be shorter than Han Solo’s was,” Barton said.
Like competitors Opendoor, Offerpad, Zillow, and Redfin had paused homebuying in March, due to the spread of COVID-19. At the time, Zillow cited safety concerns for pausing the buying aspect of the business in all 24 markets in which it operates. Redfin Glenn Kelman had cited the difficulty of pricing homes.
Redfin also said during its Thursday earnings call that it was starting its iBuyer program, dubbed Redfin Now. The program is restarting in Austin, Texas, Denver, Colorado, and California’s Inland Empire. The company expects to restart the program in additional markets in the coming months.
During a call with investors, Redfin CEO Glenn Kelman was optimistic about the company’s iBuying business. The goal, he explained, is to “sell as many houses as possible while owning as few as possible.” The company has largely succeeded at that project, significantly reducing the number of homes under contract over the course of the pandemic. And while the program won’t generate a profit, that’s only because of the cost of paying staffers; Redfin will actually make money on the sale of the homes it still has to sell.
Kelman added that “Redfin now performed better in a downturn than we feared.”
Barton, meanwhile, said customer demand has steadily begun to improve for Zillow Offers homes, since states began to open up again.
“Housing has remained resilient and customer demand has improved in early quarter two as stay-at-home orders have begun to be partially relaxed,” Barton said.
Both Opendoor and Offerpad returned to buying this week. Offerpad with a new safety certification, immediately returned to every market — including the ones where it acts as the capital for Keller Offers — while Opendoor just launched in Phoenix with a new contact-free selling platform.
In the shareholder letter, Barton also revealed that Zillow set a new revenue record for Zillow Offers in the first quarter of 2020, generating $770 million. The company sold 2,394 homes and purchased 1,479 homes through Zillow Offers in the first quarter, ending the quarter with 1,791 homes in inventory.
The lower inventory was a strategic decision and not directly as a result of pausing Zillow Offers, however, the company does expect to see a significant decline in revenue in the second quarter from the homes segment. In the letter, Barton reveals the company expects between $325 million and $350 million in revenue from the homes segment.