We've determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.
Zillow Offers bought houses on the strength of Zillow's own price model and resold them. In the third quarter of 2021 it bought 9,680 homes and sold 3,032, and took a 304 million dollar writedown for having paid more than it now expected to get back. Zillow closed the business and cut a quarter of its workforce. This one predates the language model era entirely and is the oldest lesson on the page: the model was not obviously broken, its error was simply more volatile than the business had been built to absorb, and the company had put its own balance sheet behind the prediction. Barton's other line from the same day is the one to remember, that the observed error rate made the company look like a leveraged housing trader rather than the market maker it set out to be.
