zillow's housing scam & the bubble | -28%

The FTC just sued Zillow and Red Fin.

And we got to talk about the housing

market in general. Is it in a giant

bubble? What warning signs should you

look for? And what should you stay away

from and avoid in this market? Let's

talk about it. So, first things first,

the Federal Trade Commission just sued

to draw to to block a rental listing

deal between Red Fin and Zillow. Now,

we've been diving into this and there's

some sus things going on and I'll show

you some examples of what I think is

going on. But here's the complaint as

listed by or at least the complaint

overview is listed by the FTC. FTC sued

Zillow and Redfin over illegal agreement

to suppress rental advertising

commission.

Zillow and Redfin had an unlawful

agreement that eliminated Redfin as a

competitor in the market for placing the

advertising of rental housing on the

internet. Now, initially you might

think, well, what are you talking about?

Like, I can go to Redfin and I could see

places listed for rent. What do you mean

you don't there's there's a suppression

of rental housing? And I think this is

exactly the point. The FTC is saying

they make you think on Redf Fin all of

the listings are there, but they're

actually hiding them from you. Listen to

this, and I'll show you what I was able

to find quickly. Take a look at this.

So, Zillow uh and Redfin operate two of

the nation's largest rental ILS networks

by traffic and revenue, including Zillow

Rentals,Rent.com, and

Apartmentguide.com. The complaint

alleges that in February of 2025, Zillow

and Redfin entered an illegal agreement

to dismantle Redfin as a competitor in

the advertising market for multifamily

rental properties. Now, they

specifically say multif family, but

watch because I think it actually goes a

little further than that. In exchange

for a $100 million payment and other

compensation for Zillow, the complaint

alleges Redfin has agreed to end

advertising end its contracts with

advertising customers and help Zillow

take over the business, stop competing

with Zillow for multif family properties

for 9 years and

only become a syndicator of Zillow

listings, making Redfin listings

basically a copy of Zillow. Redfin then

fired hundreds of employees and then

helped Zillow pick and hire the best of

the terminated workers. Paying off a

competitor to stop competing against you

is a violation of federal antirust laws.

Okay, let me explain that and then I'll

give you a quick breakdown of what the

heck is going on in the actual housing

market. We'll talk rates and

expectations, bubble market, and all of

that. I'll keep that shorter and more of

a synopsis for you. Let me first explain

to you the smoking gun. Uh, and and this

is my read into this, so I could be

mistaken, but let's take a look at some

of this. So, when you go on to Redfin

right now and you look at rentals for

for rent, I I found this listing on a

multif family complex that was listed as

provided by Zillow. So, so far that FTC

complaint makes sense. What we're

finding is, oh, okay. Yeah, you've got

uh you know listings that are basically

a copy of what's on Zillow for

multifamily properties. And so then what

I did is I wanted to see if this would

extend to single family properties and

what we're finding with singles. And so

what I did is I went to go look at what

properties are for rent on Zillow in

93004 and I compared them to what's

listed for rent on Red Fin. and Zilla or

Red is usually known for having listings

pop up within like 5 minutes of showing

up on the MLS or somewhere for rent. And

take a look at this. I don't know if

this is exactly what's going on, this is

related to it or what, but take a look

at this. Zillow shows right here on

Santa Margarita Road a $4.4,000 listing

right here. So $4,400 per month. And

then here's one on Fallen Leaf for

$3,900 per month. 11 hours ago. And what

you'll notice is those are not visible

on Red Fin. Fallen Leaf A, not visible.

Santa Margarita, not visible. But this

one over here on Onida is visible. And

so what did I notice? Well, when I went

to the listing on Onida, and I went to

the listing on Onida, I saw that this

one says it's listed for rent. It's on

Redfin. And look at this. Listed by

management company with a verified

source. A little green check mark. This

listing comes from a Zillow from a

verified source known as an established

property manager. Okay, so that implies

like some kind of good reputation or

whatever, right? I actually think it's

just people paying Zillow a fee to list

their rentals because watch this. If I

zoom in to those two properties that are

not listed, the one on Santa Margarita

Road and the one on Fallen Leaf that do

not show up on Red Fin. So, they're

invisible on the Red Fin marketplace.

Nothing on Fallen Leaf. Nothing on Santa

Margarita. What happens? Oh, look at

this. listed by property owner, the Yang

individual over here and the person on

Santa Margarita, Khloe Buena Properties,

not verified sources, which means

they're probably not paying Zillow their

extortion fee. And guess what? The

listings just don't show up on Redfin.

So, it's kind of and potentially a way

for Zillow to gate what listings show up

on Redfin unless people pay the Zillow

extortion fee. And now Zillow's getting

smoked for it. Now, it could also hurt

Rocket Mortgage because see, Rocket

Mortgage just bought Red. They're also

buying Mr. Cooper in a big

consolidation. So, it's no surprise that

the stock just tanked for a moment when

the news hit. Looks like people are

taking advantage of it as a buy the dip

opportunity. Hey, the Q's just went

positive, but it just shows you some of

the shadiness that's going on in the

real estate market. Now, we've got to

also give you a recap of what's going on

in the housing market in general and

what's going on. Like, are we in a

bubble? Is this, you know, time for an

oopsy dupsy bubble pop? And what are the

big risks to look for in this market?

We'll give you a recap on those.

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The Wall Street Journal is reporting a

rise in accidental landlords being bad

for investors who want to bet big on

rental properties. Now, that suggests

that buying rental properties is a bad

idea. And it can be if you're a company

like Openoor. In my opinion, if you're a

company like Openoor, you tend to lose

money handoverfist. Now, I really like

this particular property because it has

a square footage of 6969, which are some

great numbers here. But here's a

property that Open Door acquired in

February for $772,000.

And it looks like they flipped it based

on their description of new roof, new

interior paint, fresh paint, new

flooring throughout, kitchen cabinets or

whatever. Now, they've got plenty of

weeds even in their listing photo, which

is kind of sad. and they didn't end up

doing any landscaping in the back. But

broadly, the property looks relatively

moving ready and you got yourself your

clean slate. They threw down some

carpet, some plank, and uh painted the

inside pretty much, you know, basic

colors here. Fine. But the problem with

Zillow's listing here for Open Door is

it indicates the property sold for

$772,000.

They fixed it up and after almost 3

months listed it for $865,000.

This is open door and it's gone straight

down 850 840 833 824 811 800 794 that's

what it's listed for now I think a big

danger number one right now is flipping

real estate and that's probably why

you're seeing this rise in quote

accidental landlords basically problems

in the forale housing market are

starting to in uh infect the rental

business now the Wall Street Journal

says that rents in top 20 US housing

markets for single family are expected

to rise just8% this year, the slowest

pace since 2011 when the job losses

caused by the global financial crisis

made it hard to increase rents. And so

where you're seeing this big drop in

slowness in home prices is Atlanta,

Dallas, Phoenix, Houston, Tampa, and

Charlotte with the exception of trying

to flip like Openoor, which is

historically a really bad flipper. Their

net margins are somewhere around 7% and

they tend to do a pretty bad job at

their renovations which makes me bearish

on Open Doors earnings. But then again,

you know, hey look, you can play the

momentum in the stock. We in the course

member membership, use coupon code

daddy's back. We were able to play this

somewhere between 60s up to $5, but I

think over $5, the momentum's gone too

far and open door needs to come down a

whole lot more. And I think their

earnings are going to suck mostly

because I think fundamentally they just

suck at their business. But where you're

finding the biggest pain are classically

in the overbuild markets. We went

through this analysis on the Redfin data

center earlier where we could see that

in San Diego your year-over-year

positive on pricing with the exception

of a small little bump over here in for

about 1 month in 2024. You find this

broadly true of most areas that are blue

state areas like New York or California

areas just like we saw in the Wall

Street Journal piece here. But in

Dallas, Tampa, and Texas, you're still

seeing the declines in prices where,

well, that's all metros, which is the

entire country. Entire country on

average doing fine. But you look at some

of those overbuilt areas, that housing

selloff is actually worsening. You are

now sitting at the lowest level that

you've sat in really the last four

years, maybe absent that little moment

right there. 421. Nope. Yeah. 421 over

here. Uh 427 right now. You're basically

at the lows compared to the high you saw

over here of 574 which is down over 25%.

Which is crazy. So what are the real

bubbly risk factors in the market? Few

things. Number one, bad bad time to

flip. Number two, be careful of the

overbuilt housing markets because that's

where you're really getting burned.

Number three, be careful of getting

suckered into, in my opinion, dangerous

loan products because yes, right now

it's getting more popular to go for

creative financing because frankly it is

getting expensive to finance new real

estate. I mean, we now have one in five

new mortgages that are over 6%. Which is

really expensive. And it suggests or

implies at least that hey, there'll be a

big refinancing boom when interest rates

come down. The only problem with this is

if you have a high interest rate loan

and you're in an easy to build area like

Atlanta, Dallas, Phoenix, Austin, Tampa,

Charlotte, North Carolina, or some of

these other states, unlike the harder to

build areas of the West Coast, you're

potentially going to run into more risks

trying to refinance because what happens

if we end up in an unemployment

recession, rates get cut to zero

frantically, but you're stuck with a

fixed rate loan over 6%. % or you went

for creative financing like an

interestonly loan with a fixed rate term

coming in the future, you might not be

able to get the appraisal to justify

refinancing. So, there are real risks

here. First of all, I hate Zillow. Screw

them for limiting rental competition. We

see real big problems here and frankly,

Zillow probably deserves to get sued. I

hate Zillow. Sorry. Can't stand them. As

far as uh Rocket Mortgage, eh, it'll

probably end up creating a buy the dip

opportunity for the stock as we see

here. Stock's down 4%. It was down even

more when this news broke.

Over time, as interest rates come down,

the lenders should do pretty well. Loan

Depot, Rocket Mortgage, United

Wholesale, Rocket Mortgage now owns Mr.

Cooper, and Red Fin. Redfin is also a

lender. They'll be fine. Worst case

scenario, Rocket Mortgage here has to

pay back some money to Zillow. Uh, but I

think really Zillow is the pooper duper

here. They're the the sort of devil in

the blankets, if you will. But anywh

who, this is Zillow for you. So, second,

stay away from flipping. Third, be

cautious of that creative financing

risk. Big danger in my opinion. And pay

attention. Open Door might just be a bad

flipper. So maybe if you could do good

flipping work, you'll be all right. But

as far as a broader big housing market

bubble, I don't think we're in that

cycle now where we're going to see

another 2008. Not at least until we end

up with a big oopsie-doopsies by

actually blowing up the bubble more.

That's actually what I think Trump is

going to end up accomplishing. We'll end

up getting lower rates and potentially

an unemployment recession or even just a

softer labor market here. The lower

rates with fewer consumer protections

because, you know, Trump's right-hand

man, Mr. vote gutted 90% of the consumer

financial protection bureau I think will

lead to a lot more risky financing a lot

more bubbly kind of financing and

frankly you probably got another 10 to

20 years before you see another real

bubble in the housing market AI bubble

that might be a different topic

>> knows about this

>> we'll we'll try a little advertising and

see how it goes congratulations man you

have done so much people love you people

look up to you

>> Kevin Praath there financial analyst and

YouTuber meet Kevin always great to get

your Take