Realtor Accuses Zillow of Manipulating the Housing Market to Pump Up Prices

Thanks in large part to HGTV, everyone is well aware of what it means to flip a house. What you may not have known, though, is that Zillow, the popular real estate site which shows you which homes are for sale across the country, is also in the business of buying and flipping houses. Although that may not seem like a big deal, one TikTok user is claiming that Zillow is manipulating the housing market.

In a video posted to his TikTok, Nevada real-estate agent Sean Gotcher criticized the "iBuying" model that companies like Zillow use to buy homes and sell them for a profit. Sean doesn't name the company but says that this company has a website where many people search for homes when they're bored and that this company uses that data to begin buying houses in those markets and flipping them for a profit.

Sean continues by saying that Zillow often buys a certain number of homes in a neighborhood at one price and then purchases one additional home at a higher price, thereby creating a new comparable price that will ultimately raise the appraisal value of all the homes they've purchased.

In an email to MarketWatch, a spokesperson for Zillow said that Sean's videos weren't accurate. “The internet has empowered millions of consumers with more information, transparency and tools in real estate to help them make smarter real estate decisions, many provided by Zillow for more than a decade,” the spokesperson said. “Unfortunately, the internet can also sometimes be a source of misinformation and falsehoods — as is this case.”

Although Sean's video was persuasive for many, MarketWatch also spoke to Gilles Duranton, a professor of real estate at the University of Pennsylvania's Wharton School who claimed that the housing market is not that easy to manipulate. What's more, Zillow's program has proven to be less profitable than Sean may have initially believed.

Thanks to a labor shortage, Zillow initially paused its flipping operations through the end of 2021. What's more, the company is also selling many of the properties it currently has in its portfolio for less than it purchased them for. As a result, the company's stock price has taken a nosedive in recent days, making it clear that Zillow's housing market manipulation definitely wasn't successful in giving them enormous power in the real estate market.

More recently, Zillow announced that it would be permanently closing its home-buying operation because of enormous volatility in the housing market. The company also said that it would be laying off 25% of its workforce. These steps were all in an effort to steady the business, which missed its earnings targets during a recent call with investors.

Clearly, Zillow is not the dominant market power that some TikTok users made it out to be. The real-estate market appears to be too complex for any one company to manipulate it effectively, at least for now.