After betting heavily on iBuying, Zillow Group’s revenue more than doubled in 2019 to $2.7 billion, the company said Wednesday.
Over the course of 2019, Zillow sold 4,313 homes at an average $316,500 a home — a dramatic increase from 2018, when it sold 177 homes at an average $295,800 a home. Zillow trumpeted an 158 percent annual increase in revenue, primarily driven by iBuyer sales.
“In all, I’d characterize 2019 as tumultuously remarkable,” Zillow Chief Executive Rich Barton said in a release.
But the release glossed over the fact that the losses in Zillow’s iBuying segment are increasing.
In the fourth quarter, Zillow said it purchased 1,787 homes and sold 1,902 homes. It has 2,707 homes in its inventory. Zillow lost an average $6,400 on each home sold, up from $4,800 per home the previous quarter. In the last quarter of 2018, the iBuying segment had actually been earning a profit, earning an average $1,700 per home sold.
Earlier this year, Zillow obtained a broker license in New York amid a push to get licensed throughout the country.
Allen Parker, Zillow’s chief financial officer, said in an earnings call that he expected the company’s iBuying losses to continue as it expands operations in the 23 markets where it operates and launches in a handful of other markets in 2020. He expected the iBuying segment to lose between $85 million and $95 million in the first quarter of the year “as we continue to test and innovate.”
Home renovations accounted for the largest increase in Zillow’s cost per home. iBuyers pay an army of landscapers, painters, contractors and cleaners to work on homes they purchase with the aim of getting them ready for the market within a few weeks. While iBuyers say they buy homes in need of few repairs, Zillow appears to be willing to take on increasing amounts of renovations as it fights for market share.
In 2019, Zillow spent an average of $13,400 per home on renovations, up from $8,800 the year before. Because it pays vendors to make renovations, that money — a total of $57.9 million in 2019 — is reshaping small businesses across the country.
Zillow is not the only iBuyer plowing money into home repair and maintenance services. Opendoor spent $132 million on local contractors and tradespeople in 2019, $11 million of which went to workers in the Houston area.