Big institutional investors have been spending billions and billions of dollars buying up single-family homes in order to rent them back to working class at elevated prices. Rents are up nationwide by a shocking and unsustainable 15% from last year.
Institutional investors made up about 20 percent of the home-buying market in 2020, which is an enormous chunk.

One of those big institutional investors is Zillow, and Zillow has a big problem.

Zillow is trying to offload around $2.8 billion worth of houses onto investors after it bought them with the intent of selling them to hopeful homeowners and landlords, according to a report by Bloomberg....Now, according to Bloomberg, Zillow is looking to offload around 7,000 of the homes it bought.

Two-thirds of the houses Zillow bought last year are worth less than what Zillow paid for. In places like Phoenix, 93% of Zillow's homes are underwater.

Of course, this isn't a housing bubble. Almost every economist and industry experts will tell you so.

The good news is that few economists believe that the current run-up in housing prices is a bubble that's about to burst, taking the economy down with it.

The bad news is that practically no one was worried about the housing bubble in 2007, either.
Former Federal Reserve Chairman Alan Greenspan famously insisted in 2005 that there was no bubble.
...
The previous record for rising home prices was a 14.4% year-over-year gain in the fall of 2005, according to Case-Shiller. The US housing market blew past that mark in April of this year, with a new record set every month since. Year-over-year prices increases now stand at 19.9%.

Sure things are different from 2007. The debt ratios are much smaller. On other hand, prices are much higher this time, around one-third higher than the last peak bubble prices. In order to get back to non-bubble levels prices would have to fall much further.

Zillow projects that national home price increases will slow but not start to decline. It sees 13.6% growth from September 2021 through September of 2022, a faster pace of increase than its previous forecast. Goldman Sachs forecast earlier this month that prices would rise another 16% by the end of 2022.
..."The housing market is out of whack. It's not sustainable. It is overvalued, stretched and vulnerable as [mortgage] rates rise, and affordability gets crushed," he said. "But I'm not concerned we're going to have a crash."

Just to keep things in context, home prices have never been higher and unaffordable.
At the same time, interest rates have never been so low, and thus have nowhere to go but up.
Meanwhile, supply chain problems and excessive Federal Reserve money printing is causing inflation to rise. This leaves historically low bond yields deep into negative territory after factoring in inflation. It's only a matter of time before people stop buying bonds because they lock in losses. When that happens bond prices will fall, which automatically will cause interest rates to rise, which will very rapidly cause already unaffordable home prices to become dramatically more unaffordable.