Housing market downturn hits digital home flipper Opendoor with major losses
Shortfalls run as high as 75% in some markets.
Online home-flipping service Opendoor is being slammed with significant losses in home sales after it bought up real estate in major lots in the hopes of flipping homes in a once-white-hot real estate market that has since cooled off.
Measured by the gap between what it paid for homes and what it's now selling them for, Opendoor is seeing cratering losses in "key markets such as Los Angeles, where the company lost money on 55% of sales, and Phoenix, where the share was 76%," Bloomberg reported this week, citing figures from YipitData.
The sharp turnaround mirrors the ongoing cooling-off of the housing market, which has seen skyrocketing prices over the past several years amid massive demand and sharply constricted stock.
Startups like Opendoor hoped to cash in on those price hikes by leveraging significant capitol to amass large real estate portfolios that they would flip and sell at huge profits.
Yet the company "warned investors that it expected to lose as much as $175 million in adjusted earnings before interest, taxes, depreciation and amortization in the third quarter," Bloomberg said this week.
The news outlet noted a similar decline in fortunes for Zillow's "iBuying" effort last year, wherein the online real estate listing service closed up its digital flipping service after incurring roughly $1 billion in losses.
Just News, No Noise
- Stanford president under investigation after school newspaper report about possible academic fraud
- As 71% in poll say Maricopa County issues tipped Senate race, judge sanctions Kari Lake lawyers
- Twitter docs released by Musk and journalist suggest Democrats could manipulate speech on platform
- Aide to New York attorney general resigns amid harassment claims of ‘inappropriate touching’
- FedEx driver kidnapped, murdered 7-year-old Texas girl: police