While this sounds plausible, I think there are a couple of factors that work against this theory:
1) Why layoff your data science division if they are predicting with accuracy?
2a) If you have enough conviction to call the top of the market, why sell off so much housing at a huge loss? Zillow are the only participant in the residential real estate market losing money right now.
2b) If you see signals of a forthcoming housing crash, why not short the housing market?
The simplest explanation is that Zillow was poorly run.
It may have been poorly run, and nonetheless correct that:
- they could not buy houses without overpaying (relative to what they could sell them for a few months down the line)
- the housing market would not recover for several years (so no need to keep that extra 25% of your labor force, especially if you anticipate a decline in revenue from real estate agents coming soon)
I believe there are real estate ETFs that can easily be shorted. Many of the more complex contracts and instruments still exist, there are just more limitations on how banks can invest in them.
1) Why layoff your data science division if they are predicting with accuracy?
2a) If you have enough conviction to call the top of the market, why sell off so much housing at a huge loss? Zillow are the only participant in the residential real estate market losing money right now.
2b) If you see signals of a forthcoming housing crash, why not short the housing market?
The simplest explanation is that Zillow was poorly run.