One week after deciding to get out of the iBuyer home-buying business, Zillow has agreed to sell 2,000 of its homes to the second-largest single-family landlord in the country, a controversial and growing powerhouse that has faced allegations it evicted tenants during the national eviction moratorium and didn’t properly maintain Black family homes.
The sale represents a dramatic turn for the homes themselves, which were originally supposed to be quickly sold to single families, but will now be permanently rented out by Pretium Partners, a New York-based investment firm run by former Goldman Sachs partner Donald Mullen. The homes Pretium purchased are reportedly scattered across 20 U.S. markets, according to the Wall Street Journal.
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“Pretium has long been committed to providing quality housing options for residents,” a spokesperson for Pretium told Motherboard. “At a time when move-in-ready homes are in short supply, we continue to invest in communities and improve access to housing throughout the U.S.”
Pretium, which now owns roughly 70,000 single-family homes, has become a force in the rental market, offering leases to families who themselves have been priced out of the home-buying market but want access to the suburban lifestyle. According to the company’s own website, Pretium’s residential portfolio has surged in recent years, more than doubling between June 2019 and June 2021.
That growth has come with allegations of callousness and worse. Earlier this year, a nonprofit tracking evictions by corporate landlords listed Pretium as “by far the most frequent filer of evictions” after the CDC’s 2020 eviction moratorium took effect. The nonprofit claimed that Pretium evicted residents in majority-Black Georgia counties at seven times the rate it did in majority-white Florida counties, filing to evict tenants from nearly a quarter of the homes it owned in majority-Black DeKalb County, Georgia in the first six months of 2021. It also said that “predominantly Black residents in Minneapolis” said Pretium is failing to adequately maintain their rental homes. Pretium’s Progress Residential also described the moratorium as an “unconstitutional overreach” in a court filing, according to the nonprofit.
Pretium pushed back aggressively against the claims when asked about them by Motherboard, saying that the nonprofit in question, the Private Equity Stakeholder Project, had “a decidedly biased agenda” and was pushing “half-truths, false claims and outright lies.” Pretium added that it had offered $60 million in assistance that included rent forgiveness and relocation assistance to residents during the COVID-19 pandemic and invests an average of $50,000 in homes over a five-year period.
“Pretium has acted in full compliance with CDC Moratorium and Fair Housing laws, and have never evicted a resident covered under a valid CDC declaration for non-payment of rent,” the company spokesperson told Motherboard. “We pride ourselves on our commitment to providing high-quality, affordable housing options, outstanding service and housing stability, particularly during times of crisis.”
More generally, eviction practices, which disproportionately harm members of marginalized communities, have caught the attention of the federal government this year. In March, the Federal Trade Commission and the Consumer Financial Protection Bureau issued a joint statement about “reports that major multistate landlords are forcing people out of their homes,” and said that both agencies would be investigating. In May, they sent letters to major landlords reminding them of their obligations under the law.
Zillow ended the most recent quarter with a little under 18,000 homes that it either owned or was in the process of purchasing, according to the company—all of which it plans to sell in the coming months. A Zillow spokesperson told Motherboard in a statement the company is hoping to offload the homes “as quickly as possible,” which means they are willing to sell to whoever is willing to buy them, including “individuals and families, institutional or individual investors, and nonprofits.”
Zillow had previously hoped to become a massive player in the burgeoning iBuyer industry, in which companies buy moderately priced homes in decent shape, then quickly fix them up and flip them, pocketing a convenience fee and, ideally, any appreciation. But the company struggled to accurately price homes and determined the potential reward was not worth the risk of figuring it out along the way as they spent millions on American homes. Ultimately, in early November, the company decided to kill the home-buying program, sell off the homes, and lay off 25 percent of its workforce.
Pretium paid market price for the homes as part of the deal with Zillow, although Zillow expects to lose money on the whole as it offloads its inventory.
Other investment firms that rent homes, including the titan of the industry, Invitation Homes, are reportedly circling Zillow’s inventory and considering making bids as well.