Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 902

On Monday, Christopher Hume of the Toronto Star responded to the recent backlash against Sidewalk Toronto with a piece called, Anger over Google’s vision for Toronto waterfront is misguided . The below excerpt is what I was trying to diplomatically allude to with my post on net present value . We need to look at what we are getting and what we are giving up (by way of foregone revenue).

What had civic (and provincial) nabobs gnashing their teeth was Sidewalk’s suggestion that it should receive a share of city property taxes and development fees. And what would the New York-based outfit do in return? A few things, it turns out. Specifically, it would finance the long-delayed Queens Quay LRT, build the infrastructure necessary to remake much of the Port Lands, launch a new wood-based construction industry and, oh yes, kick-start redevelopment of 140 hectares of long neglected landfill.

I also don't understand how the possibility of expanding into the Port Lands has come as a surprise to anyone. That was always integral to the opportunity here in Toronto. What your thoughts?

It is that time of year again. For those of you who are regular readers of this blog, you'll know that every year around this time I go on a snowboarding/ski trip with groups of friends that I went to grad school with and/or grew up with. We have been doing this for a decade now. Last year we were in Jackson, Wyoming (my favorite place so far). And this year we are in Austria. Here is a photo that I took -- of paradise -- this afternoon:

I'm not sure there's anything to say after a photo like this. So I'll leave it at that. See you tomorrow.

Bloomberg recently published a good summary of Zillow's business and their move into algorithm home buying and flipping. (They are trying to avoid the "flipping" moniker because of the negative connotations associated with it.) Zillow started buying homes directly from owners last spring. They charge the seller between 6-9%, so more than using a typical agent, but inline with their competitors. There's clearly a segment of the market willing to pay a premium for the added convenience. The thinking used to be that discount brokerages were the way to disrupt the housing market. This is the opposite strategy. Interestingly enough, Zillow felt that they needed to make this pivot with their business model. It used to be about selling ads. They were definitive in that they were not a disruptor of real estate agents. But now:

If getting an offer from an iBuyer became a crucial step in the selling process, they worried, Zillow could lose its audience and its advertising base. What’s more, market researchers kept finding that consumers said they’d pay a modest premium to get a cash offer. “People expect to press a button and have magic happen,” says Rascoff, a 43-year-old former Expedia executive who’d earlier started the travel search engine Hotwire, which he sold to Expedia for $700 million. Getting into the business of buying homes directly, Rascoff says, was “the only way to remain in a leadership position.”

Here is a map of the companies in this particular space and the cities in which they operate:

Some investors aren't sold on this strategy and have begun short selling Zillow (according to the Bloomberg article). I keep getting the sense that there's a greater end game in the cards here. It is about building up A (algorithmic home buying and flipping) in order to unlock B. But what's B -- a new end-to-end transactional model for the housing market?