[Dave_TRS]

Honest question, why is it gross? Fixing up homes is very inefficient and usually done by mom and pops. Why not find an efficient model to do it, just like car manufacturing, chip fabrication, etc.? It's a massive industry and could be a boost to productivity, which is the ultimate driver of living standards in the long term

[oldstrangers]

Former real estate dude. There are a lot of reasons but I'll just run through a few:

A company like Open Door can monopolize a local market very quickly. Pick up 10 listings in a neighborhood, suddenly they control all the comparable properties which means they dictate the housing prices. Or maybe they want to buy up the remaining home inventory in the surrounding areas, and they'll use 10 of their own properties to explain why your home is now worth less.

Corporations can qualify for nearly interest free loans and offer up ridiculously high bids that most private individuals cannot hope to compete with. The effective buying power of a private individual vs a corporation is next to zero.

Corporations probably don't want to flip the home in the short term, they might want it to be a rental for the next 10 years while it appreciates on the books.

So in short, you have a system that can control the housing supply, control housing prices, force out real potential buyers, turn a lot of would be buyers into renters, all while increasing some billion dollar corporation's bottom line. Should absolutely be illegal.

[Noumenon72]

This is the kind of take that could fearfully explain why a national corporation like like McDonald's would be able to corner the food supply to raise prices, then buy up restaurant sites to prevent others from using them. Or how billionaires could purchase all the tickets at Disney World so no one else can go.

Sure, you _could_ waste all your money on villainous anticompetitive practices, but it's more profitable to a) provide a service where you have an efficiency advantage b) only purchase things you need, bidding at the margin, where people don't mind selling to you.

I would expect a system where Open Door is active to be better for consumers and investors than the incumbent system you represent.

[oldstrangers]

This comment is so intentionally disingenuous I don't even know where to start.

But I'll just offer up this:

"Large investment firms are converting single-family homes to rentals and building communities to rent in the Houston metro area to help meet rising rental demand, while the housing shortage is driving more people into renting. The Houston Association of Realtors reported June 15 the number of leased single-family home rentals increased 24.8% from May 2021 to May 2022. While rising mortgages and low inventory are contributing to the trend, experts said potential homebuyers are also facing competition from real estate investment firms—or institutional investors—buying properties to sell or lease.

Locally, NAR data showed 38% of single-family properties purchased in Harris County in 2021 were bought by institutional investors. Property data from the Harris County Appraisal District shows nearly 7,000 homes in Harris County as of June are owned by five NRHC members and their subsidiaries."

https://communityimpact.com/houston/bay-area/city-county/202...

In what world would you imagine that this is better for consumers?

I also don't "represent" anything. I worked in real estate from a technical side (mostly CRE), and had nothing to do with the trash that goes on from either side. I just got to witness it.

[happytiger]

Yes but opendoor just competes against other companies of scale.

The issue is that individuals who wish to purchase and live in homes cannot compete with companies of scale at all.

So it’s not about anticompetitive practices, because it’s now two corporate incumbents competing, but a corporate incumbent competing against an individual, who stands no chance against that scale of cheap money.

Competitive effects do not always lead to desired outcomes even if they create healthier markets.

[thereisnospork]

Its different from restaurants because housing is a local monopoly, or locally monopolizable. This is due to regulatory constriction of supply and lack of for-like alternatives.

You can't corner the food market by buying restaurants both because there are grocery stores and anyone willing to wade through a small amount of red tape can start a hot dog stand to undercut you. You can corner the housing market in a school district, or neighborhood because families can't live in tents or cars and the government forbids via zoning would-be opportunists from undercutting a monopolization attempt by e.g. turning their 1 unit dwelling into a 5 unit dwelling.

[dotnet00]

I'd argue that the key difference is that the public isn't having to deal with a McDonalds induced food price increase while the public is very clearly having to deal with housing price increases induced by practices of this sort, especially in big cities.

[beeboop]

> Sure, you _could_ waste all your money on villainous anticompetitive practices

History shows time and time again that anticompetitive practices are wildly profitable.

[jnwatson]

As soon as someone isn’t improving a property, it isn’t a flipper. Sitting on property exposes them to market risk and makes them a regular corporate landlord.

[wollsmoth]

Yeah I'd have no problem if they want to just swoop in, fix up a house that just needs some love and then get a profit. I don't mind buying an old place but I really don't want to deal with renovating one myself.

[mrguyorama]

If every house costs $600k because it's been "flipped" with brand new appliances, a coat of paint, and other BS things, how the hell is a new generation supposed to afford that?

[fredgrott]

The driver here is if they can get low interest to zero interest loans. If we remove that then problem blows up.

We could do that by changing how banks come up with the interest rate on corporate loans versus individuals who want loans.

[ABCLAW]

The problem doesn't necessarily blow up immediately. If people's analysis of the EV of a particular deal is positive on the basis of the bubble continuing, some groups will find continued investment is within their risk tolerance and keep going.

However, if interest rates rise, the EV drops, and sentiment may shift which will substantially increase the risk that market appreciation strategy fails.

Eventually the music stops and enough investors stop pumping the asset class, it peaks, and the lack of retail ability to shoulder the debt-load results in collapse in pricing - some major US banks have indicated that mortgage originations are down 90% this year.

Interest rates are only part of a larger calculus. What ultimately blows the problem up is a shift in perception about real estate being a good investment vehicle for large sums of capital.

[smileysteve]

The home ownership based public policy for this is to have high residential property taxes that are 90% reduced for homesteaders.

The downside is that such a policy reduces rental properties available.

[winstonprivacy]

This will never happen because the credit ratings for municipalities depend on property taxes.

[cragfar]

All the companies that tried this failed spectacularly and closed up shop. Even with "free" money.

[oldstrangers]

Open Door alone owns like 600 homes where I live. Black Rock owns entire subdivisions and communities. Not sure what you mean.

[cragfar]

Open Door has laid off 20% of it's work force, it's stock has gone from $24 to $1.5 in a year, and it's losses are increasing.

Black Rock was buying entire subdivisions developed for the purpose of being sold to investors. They were basically large scale apartment complexes. That's wildly different than buying up random homes throughout a city.

Zillow had to give up last year and showed a $300 million loss, and now Redfin is too. I'm not saying it's impossible, but SFH flipping doesn't scale well at all.

[oldstrangers]

I still dont know what you're talking about or if you're just unaware of the data.

"Locally, NAR data showed 38% of single-family properties purchased in Harris County in 2021 were bought by institutional investors. Property data from the Harris County Appraisal District shows nearly 7,000 homes in Harris County as of June are owned by five NRHC members and their subsidiaries."

https://communityimpact.com/houston/bay-area/city-county/202...

[cragfar]

>Citing NRHC member-provided data, Howard said that out of 23 million single-family rental homes in the U.S., only about 300,000, or 1.3%, are owned by large companies.

NRHC includes the aforementioned Blackrock. Your quote says the top 5 SFH companies own 7,000 homes in Harris County. A county with 1.6 million homes. The sexy headline of 28% of all homes being bought by institutional investors says an LLC is an institutional buyer. It wasn't Blackrock hoovering up all these homes, it was smaller shops and normal people flush with cash and leverage.

[coding123]

But what if one succeeds (or is but you don't know about it)?

[uoaei]

Yeah, and what if they gave away houses out of the goodness of their hearts?

What-if games don't provide great insights in cases like these. Trust me, if it worked at these scales, you'd hear about it.

[ABCLAW]

There are plenty of REITs operating in my city that have substantial detached residential holdings.

The EV on renting and holding substantially improves if the housing market takes off like a rocket. It might not work in your market, but that doesn't mean it doesn't exist.

[uoaei]

Wild speculation and hypothesis doesn't mean it exists, either.

[nrmitchi]

> Fixing up homes is very inefficient and usually done by mom and pops. Why not find an efficient model to do it

I 100% agree with this premise.

However this is not what Redfin/Opendoor/Zillow do. The most you're going to get regarding "fixing" is a very bad coat of paint, replacing a couple angle stops, and putting a full cover-plate over an outlet that seems iffy.

These companies are not taking an unmarketable product, actually fixing it, and putting a restored property on the market.

I agree that actual property restoration is a fantastic industry to optimize, and I could talk about this for way longer than is appropriate in this post. But the best you're getting from these companies are some lipstick-on-a-pig photos and a sellers disclosure that says "We never occupied the house so have no idea if there are any issues".

There are also other financial-engineering-esque fashions in which they make money, which are all at the expense of residential home buyers. None of the ways are actually "improve the property".

[dpkirchner]

Could you imagine if corporate buyers were required to upgrade everything to meet current code before selling? It'd likely kill the process dead, of course, but if not then at least we'd see improved homes as an outcome.

[loganb]

- Abuses building code for a non-safety purpose

- Net reduction in quality of housing stock

- Reduces capital investment in housing during a shortage

A+ 10/10 no notes

[dpkirchner]

It's really just daydreaming, but in any case, I'm not convinced that corporate buyers of used houses increase the quality of housing stock. Corporations building new houses likely do, and that's where their money would go if they are truly interested in real estate investment.

[deelowe]

If updating to current code was required, a lot of homes would have to be torn down.

[edmundsauto]

Given that a lot of flippers/corporate buyers use corporations as a liability shield in case of something going wrong, they have less skin in the game than potentially negligent previous owners. It generally seems reasonable to treat individuals and corporations differently in terms of legal expectations, in part because of that.

[nradov]

There is no difference in legal expectations. Any negligence by previous owners is legally irrelevant. The previous owners are in the clear regardless of what they did to the property, provided they follow state disclosure laws. They would only be liable in the case of actual fraud.

New construction is a bit different in that some states have a mandatory warranty period for major construction defects. So the new homeowner may have several years to make warranty claims against the property developer or contractor for negligent or non-compliant construction work.

[dpkirchner]

Sure, agreed. And I figure a corporate buyer would only go through with that is the home is bad enough that it's worth replacement. Most probably aren't, so they'll be left available for humans. It's win-win.

(I fully acknowledge this is an unrealistic proposal.)

[boringg]

They are doing it out of speculation - not improving the efficiency of the market. They thought that they had a lock for a large windfall of profits based on the trajectory of the housing market.

People don't like that because that profit comes at the cost of people who are trying to find homes at a reasonable price. I am happy their model didn't work.

Also I think you assume that their model would be efficient but I don't think it would - you still have to work with all the small mom and pop shops who are doing the actual renovation work and that quality is worker specific. There is no proof that Redfin's model would improve quality or efficiency.

Add in redfin trying to guide the market buyer on the price to purchase with their price forecast mechanism ... which I would not be surprised if they boosted their own properties (speculation, but wouldn't be surprised at all).

[dec0dedab0de]

If that is all it was, then that would be great. It would be nice If we had a handful of corporations that outsourced to local contractors to refurbish houses before reselling them, while taking a small profit for themselves.

The problem is that these companies are more interested in driving up the price of housing, than they are in fulfilling the need to facilitate a market, and make repairs. So you end up with prices artificially driven up, and many properties being used as investments against inflation. Which means that people in lower valued homes are now unable to upgrade, which means that there is less available at the low end, which leads to more homelessness.

I think local municipalities should enact speculator taxes, for anyone who owns an unoccupied property that was not recently inherited. Maybe you get 18 months after your parents die to either sell their home, or take on a tenant.

There are properties near my house that have been for sale for over 15 years. Which means the speculators holding these properties have likely paid more in taxes than they will ever get for them.

Basically I don't think that holding property hostage should not be a legal business, either you sell/rent it at the current market values, or you pay out the ass for the privilege to wait it out.

[nrmitchi]

> I think local municipalities should enact speculator taxes, for anyone who owns an unoccupied property that was not recently inherited. Maybe you get 18 months after your parents die to either sell their home, or take on a tenant.

I'd actually agree with this, with the addition of "or appeal as to why you can't". 18 months seems like a long time, but there are many situations where you just can't get something settled in that amount of time.

[Bilal_io]

It's gross in my opinion because they drive prices up. Not only the companies, but also individuals that purchase multiple homes to run a rental business. I want to see legislation that prohibits orgs from purchasing home to flip, and individuals to be taxed heavily for their 2nd+ home.

If an org really wants to profit from real estate, go build new homes, there is a huge shortage, we don't need to competes with rich companies when trying to purchase a house.

[bityard]

As a real estate investor, I can assure you that taxes on an investment property are already much higher than a homestead property. This is the main reason that outside of HCOL areas, monthly rent tends to cost more than mortgage + taxes on the same house.

I would love to build houses but unfortunately, it costs about twice as much to build a new house or apartment building than it does to buy an old one and bring it up to date. That's not even including the zoning/permitting headaches of various municipalities.

(And to be clear, I'm not advocating for the abolishment of zoning/permitting, just that some municipalities make the process unreasonably hard/expensive just because they can.)

[8note]

I think if we're allowing people to own multiple homes, that should be available not just to the ultra-rich

Putting on a heavy tax burden realted to the house price means that eventually, you get rich enough where its not even an inconvenience, and those people will have an even stronger cartel over land use

[colinmhayes]

How could people rent if it's prohibitively expensive to own multiple homes?

[gadflyinyoureye]

They won’t. This means that there will be properties eventually owned by a local taxing authority.

What people don’t get is that you need some houses to sit empty. This allows people to find a place when they move. This allows people to move around within a territory.

Also not all secondary houses are bad. I want to buy a plot of land for a small farm and a place to go in case of hurricanes. Presently there is no house. Should I be taxed for improving land for personal ways that didn’t remove housing?

Many of the comments so far are emotional. We need to do better when making policies.

[andsoitis]

> Should I be taxed for improving land for personal ways that didn’t remove housing

I’ve never done this so don’t know the answer, but when you build a house don’t you then also start to get government services in support of that house?

[onlyrealcuzzo]

> Fixing up homes is very inefficient and usually done by mom and pops.

This doesn't ipso-facto make it inefficient.

There's evidence that construction does not become meaningfully more efficient with scale [1]. At GIGANTIC scales, you're looking at maybe 10% savings. And these scales are quite rare in the US & the EU - mostly only happening in Asia.

True, on the largest investment of most people's lives - 10% is something...

Anyway - you're not going to get great returns with layers of high-paid management and beat mom & pops by much.

[1] https://constructionphysics.substack.com/p/why-are-there-so-...

[AlexandrB]

> It's a massive industry and could be a boost to productivity, which is the ultimate driver of living standards in the long term

Is it thought? Productivity has been going up for 20 years, so have essentials like housing, healthcare, and education. Wages haven't kept pace. Efficiency in the service of inflating housing prices further seems like it's going to tank living standards for many people.

[noasaservice]

Would you be OK with pricing food so high that only a limited amount of people could eat, with the pure purpose of "make more money for our stakeholders"?

How about the same, for water?

How about the same, for basic medical?

How about the same, for electricity?

Profiteering and gatekeeping essential things to live is ethically abhorrent. And yes, housing SHOULD be a right. Instead we have "right to badmouth government" and a bunch of other 'self-actualization' (Maslow) style needs, but We collectively ignore the bottom ones, like food/water/shelter.

[lotsofpulp]

>And yes, housing SHOULD be a right.

This is easy to say. Can you elaborate how to implement this “right”?

Do 330M people in the US have a “right” to live on the California coastline? It is doable, can always downsize to Hong Kong style living.

Perhaps Hong Kong size abodes are too small. Then how much space do you propose per person and per family?

[kmeisthax]

You don't need to go as far as to demand detailed central plans, as if the parent poster is a Soviet tankie. All you have to do is get rid of the already-extant central planning regime that the US has, which is specifically designed to keep land expensive.

Or, in other words: "housing is a human right" does not need to be construed as a positive obligation.

Even if we decided on positive-freedom housing rights, it doesn't mean giving everyone a California beachfront property. This is the thing a lot of Americans don't get about positive rights in other countries: when they exist, it just means that the country is going to use tax money to pay for and provide that good. This works for the same reason that welfare programs work: the existence of a large buyer, even one that's lowballing, provides price stability to suppliers.

California beachfront property can remain expensive, but the houses behind it should be allowed to build up to whatever density that the market will support.

[lotsofpulp]

> Or, in other words: "housing is a human right" does not need to be construed as a positive obligation.

I struggle to think of a way to construe it that is not a positive obligation.

Increasing zoning is not making housing a human right. It is bringing down housing prices, which is great, but it would make words meaningless if it qualified for “housing as a human right”.

On the other hand, the government reimbursing everyone for the annual cost of housing in the 20th percentile of the US is something actionable. For example, if housing at 20th percentile is $12k per year, then everyone gets $12k per year to spend on housing. They can choose to move to wherever they want.

And that example is basically UBI, so might as well just advertise that as the solution.

[noasaservice]

> You don't need to go as far as to demand detailed central plans, as if the parent poster is a Soviet tankie. All you have to do is get rid of the already-extant central planning regime that the US has, which is specifically designed to keep land expensive.

I'm not advocating public execution of billionaires here.

I'm talking about getting rid of companies like RealPage ( https://www.propublica.org/article/yieldstar-rent-increase-r... ) and other companies that either collude information asymmetry or otherwise buy up the market and wait to artificially drive prices higher..

I'm talking about restrictions of companies buying residential dwellings (not corporate dwellings, but im sure that could be gamed).

I'm talking about rent control. I'm aware that's a top-down command approach. Maybe use it as a cap per sqft?

I'm talking about relaxing or eliminating zoning restrictions. Much of them were put in place as a racist plan during the 40's-60's.

I'm talking about having banks *require* including on a mortgage application if you've paid rent for X years at Y rate, that you qualify for a mortgage of the similar terms.

I'm talking about having the mortgage rate be different (LOW) for your primary residence.

I'm talking about converting apartment complexes into a benefit corps run by the people who live there. Again, having people live in dwellings where they reasonably know that they are safe is inherently a great thing, and builds a real community. Problems that arise can be handled by the people who live there, like if a recession hits and 1/10 lose their jobs. (Yes, this is more radical.)

Every one of these changes would enable more people to have their own place to live, and live better how they want to live. Does it solve every problem? Of course not. It's steps to do this. And what I see here in my area, we're going the very wrong way. More and more are going homeless or vanlife every week. And that piece of stability disappears. And it's hard to reestablish once you're in that direction.

It's not just an individual issue - at a certain number, it turns into a societal issue that needs a society-wide solution.

[andsoitis]

C’mon. There’s oodles of space in the US… we can probably have way more people than 330m and them still live comfortably (in terms of living space).

[prottog]

> There’s oodles of space in the US

This is true now and we don't need a government guarantee of housing to make that happen. What I don't like is people who want to live in a specific place they would like to live, and wanting subsidies from others so that they can live there at below-market prices.

[lotsofpulp]

Right, so I am interested in determining how space is allocated under a system with a “right to housing”.

Do you apply to the federal government and get sent to where it is cheapest for the feds? Do you get preference for a certain region if your ancestors and relatives are more numerous there?

[wombatpm]

Sure if they don't mind living in Iowa or a Dakota

[coding123]

That is not doable, while there may be house space, the roads would turn to dust every 4 days. Or just be parking lots at that point.

[lotsofpulp]

People would have to use alternative modes of transport, and eschew individual cars, like people in Hong Kong. I do not understand “roads turning to dust” though.

[prottog]

> Instead we have "right to badmouth government"

You should look at the track record of providing food, water, and shelter in places where you don't have a right to badmouth the government and instead had "rights" to things like food and shelter.

[matchbok]

So the government has the right to take your money to spend it building housing for someone else? "Housing is a human right" is a lazy, armchair argument that demonstrates a lack of understanding of the housing market.

[noasaservice]

Whereas I'm arguing that housing shouldn't even exist as a "market" to begin with, at least in terms of residential housing. Or at least, prevent companies from owning residential housing, except under stringent terms. There's plenty other places capitalism can take hold.

I fail to understand why heavy controls that enable real humans (not made-up on paper corporate humans) to get a residence of their own, is so damned radical.

I see what the environment looks like, with RealPage ( https://www.propublica.org/article/yieldstar-rent-increase-r... ) and Zillow and Redfin, and whomever else is buying residences left and right. And I want none of it. Burn these parasites to the ground. And damn the "profit".

[ars]

Because they do a terrible job at it. I looked at a flipped house once, and they built a laundry room - with no place for a dryer vent! (I guess they hoped no one would notice.)

They had gas service in the home, but instead of running that to the dryer or range, they ran electric because it was cheaper to run a wire.

Every single thing they did they picked the cheapest, worst, option. Anyone buying that home is in for an expensive annoying time as they have to re-fix tons of things they did.

They had to change the plumbing in some areas, and instead of a 3/4 pipe, they ran 1/2 inch to far too many fixtures - you'll never notice, until you try to shower and run the dishwasher at the same time.

It was just non-stop shortcuts.

I made a policy of not even going to look at a home that was fixed without the owner actually living in it afterward.

[nemo44x]

Hopefully the home inspector is noticing these things.Clearly permits weren't pulled for many of these things since they wouldn't pass code.

But yes I agree, often flippers are taking every short cut they can to make something look nice to unsuspecting buyers but it will all fall apart in 5 years. Cheap vinyl windows is the biggest violators I've seen. Even in nice homes going for $1m.

[orthecreedence]

> Why not find an efficient model to do it

Efficient as in "most profitable?" That means changing a few cosmetic things about the property and charging the original value plus 2-3x the useless improvements that were made.

When I was house hunting a few years ago, you'd see this all the time. Someone buys a crappy house: bad plumbing, bad electrical, leaky windows, foundation issues. What do they do? Put in some frosted glass Ikea cabinets, granite countertops (wooo fAnCy!!!1), and some crappy click-lock flooring. Then they charge 150K more for the house than they bought it for.

This is my experience with flippers, and it's totally in line with "find an efficient model." They did find an efficient model: efficient for them, but sucky for the people who can no longer afford the home, and sucky for the poor sap who actually buys it and now has to dump another 200K into it to fix the real issues (and will likely end up ripping out the cabinets anyway because they are cheap and ugly).

I know there are people who do good flips, and who fix the foundational issues, but I am willing to bet they are much more skewed toward the "mom and pop" flippers.

[DrPhish]

A lot of people are cash-poor and need to make up the difference with "sweat equity". That puts them in direct competition with professional flippers, since its the same unrealized value that is being leveraged. The difference is that for one its a tidy profit, whereas for the other its a way to own a home.

[lotsofpulp]

Then the people needing to make up the difference with sweat equity should be able to pay more for the house than a professional flipper, since they do not need to account for the profit and costs of subcontractors of professional flippers.

[DrPhish]

unfortunately sweat equity (ie fixing a place up) doesn't add anything to your down payment from the bank's perspective. Cash poor is cash poor. Most people start off as young people or young couples with little to no cash and have to make their way in the world in the basic range of minimum wage and starting off with zero savings. Saying that corporate profits should come before home ownership for the average person is what was being thought of as "disgusting" earlier in this thread, I think

[rbranson]

The profit from home flipping comes from asset speculation not construction. Only one of these creates net value.

[bpodgursky]

I think the line is fuzzier than you'd think.

There's a large grey area of old/marginal/condemned housing stock where buyers are making a tradeoff between a teardown + rebuild vs buying an old house and patching it up.

Flippers who successfully rehabilitate an old house do increase the effective supply.

[nicoburns]

Where I live (UK), I think most young people would be grateful for an increased supply of cheaper rundown houses to buy. Done up houses we can't afford don't help at all.

[bpodgursky]

The thing is, a flipper is going to sell, one way or another. They'll try to stake a higher price, but they'll sell low if there's no alternative.

Supply, supply, supply is all that matters.

[uoaei]

"Guess the poors will just have to wait their turn" isn't really the great insight you think it is.

[nrmitchi]

> Flippers who successfully rehabilitate an old house do increase the effective supply.

100% agree that that is not what any of these ibuyer companies are/were doing.

[Dave_TRS]

I might have answered my own question - perhaps it's when we see corporations speculate and win it adds no value and is gross? But if they actually do come up with a better way to price houses and fix them efficiently it's a positive right?

[joxel]

Maybe at the end of a long road of terrible home buying conditions for the entire country. One has to wonder if put together it would be a net positive.

[lob_it]

The buzzword of the week is macroeconomics.

For the parachute pants aficianados, the 1980's used the term poison pill to thwart certain strategies. The linear explains a lot of "fun the mentals/fundamentals" in place in 2022.

https://www.investopedia.com/terms/p/poisonpill.asp

Layoffs, housing price decreases, used car decreases, crypto crashes, balloning interest rates.

It looks like the updated strategy is "get them high enough to where the fall kills them" :)

It does sound like a macroeconomic saying if you look at several linears for each :p

[shagmin]

Isn't the more apt to compare this to car restoration/repair or something? Fixing up homes isn't like a factory you can streamline and automate.

Just anecdotal, but the first house I bought had some issues that enabled me buy it at a discount and fix it up over time to my liking. I'm thankful I had that opportunity, and I still would've probably upgraded certain things if the flipper just went with the base options.

[sidewndr46]

When it comes to housing where I live efficiency usually isn't a priority. If it was we'd all be living in the pods by this point.

[uoaei]

Define "productivity" here, because my guess is that the metric in use does not represent median gains nearly as well as mean gains.

[mandevil]

They aren't really in the business of fixing up a home, as other people have already said. The analogy for what they are trying to do is more like high-frequency trading (as the amazing and invaluable Matt Levine has pointed out for years).

When you want to sell 100 shares of Company A, and someone else wants to buy 100 Shares of Company A, sometime you do so at just the same moment, and you can directly transact with them. However, almost all of the time you are selling and they are buying a few minutes apart. So called "Market Makers" (aka "High Frequency Traders" aka "Flash Boys") take the other side of both transactions, and get a very small cut (generally less than 1% on the modern stock market). They are basically in the business of time-arbitrage. Their goal is to almost always be net zero on the market- to have roughly the same number of buys and sells at any given moment, so that the market floats along smoothly and they make their tiny cut whether it is going up or down.

And so the home buying version of this is, it is a real pain to have to find a buyer for every seller at the exact same moment. If we could similarly have a market-maker who can buy houses and sell houses when someone comes along looking to be the other side of that transaction, wouldn't it be awesome? You could take a tiny cut of the transaction, but what a big transaction! Just for some time arbitrage. Of course, the differences are stark: shares of stock are fundamentally fungible, whereas houses are almost as non-fungible as one can get. Stock transactions are quick and painless, and don't require months of work by teams of mortgage originators, with inspections and appraisals etc. It is difficult to be net-zero as a market maker in houses, since your inventory sits on your books for months and months, either appreciating (yay!) or depreciating (boo!). All of these are serious problems with the business model. The current wave of companies attempting this basically said "what if we fix this with <waves magic wand> Artificial Intelligence?" The actual answer is that they have once again found themselves in the business of picking up pennies in front of a steamroller- the fate of all arbitrage attempts that blow up.