Zillow's Co-Founder Wishes They Did This Before The IPO

Spencer Rascoff co-founded Zillow, scaling it into a $16b real estate giant.

But everyday investors couldn’t invest until after the IPO, missing early gains.

"I wish we had done a round accessible to retail investors prior to Zillow's IPO," Spencer said.

Now he’s doing just that. Spencer has teamed up with another Zillow exec to launch Pacaso. Pacaso’s co-ownership marketplace is disrupting the $1.3t vacation home market. And unlike Zillow, you can invest in Pacaso as a private company.

With $100m+ in gross profits and rapid international expansion, Pacaso is scaling fast. Investors like SoftBank, Maveron, and more are already on board. Join them as a Pacaso shareholder.

Invest in Pacaso stock here.

_{Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. There’s no guarantee that Pacaso will file for an IPO.}

👋👋 Good morning real estate watchers! Today, we are going to talk about...

1. These poor guys thought they were dating women who wanted commitment. And they were… to 30-year fixed-rate mortgages. Love may be blind, but apparently it also doesn’t read fine print.

2. Watch Canadians ditch their U.S. vacation homes like they just found out Tim Hortons doesn’t work south of the border. Between Trump’s annexation vibes and a loonie so weak it’s considering therapy, the only thing snowbirds are flying toward now is the “For Sale” sign.

3. Marvel at developers who timed the market perfectly, dodged tariffs, and now get to raise rents while the rest of us cry into our 6.8% mortgage rejections. It’s the housing version of buying Bitcoin in 2013 and not telling your friends.

Let’s go!

TOP STORY

CONDO CATFISHING

Zhang Wei thought he was buying a future with his girlfriend. It turns out he was just buying a one-bedroom. In Huizhou, a southern Chinese city, 31 men were duped by women posing as romantic partners, who were actually real estate agents desperate to close deals.

In the wake of China’s housing collapse, even Cupid is now commission-based.

According to a state-backed housing ministry outlet, 15 women from the same firm used dating apps to lure these men into relationships that ended not in marriage proposals but purchase agreements. Authorities have launched an investigation, though experts say this "rom-com" may be “just the tip of the iceberg.”

But what might seem like a bizarre anecdote ripped from a soap opera actually reveals the deeper cracks in China’s once-mighty real estate sector—and raises pressing questions for global markets, especially North American real estate investors looking eastward with caution and curiosity.

China’s Housing Market: The Crisis Behind the Courtship

The ploy reflects a broader malaise: China’s housing market has been in freefall for four years. New home starts are down nearly 30% year-over-year as of early 2025. Prices have declined for 21 straight months. Millions of homes remain unsold. Some developments are sitting half-finished, paid for, but never completed.

Once a cornerstone of Chinese economic growth, the sector is dragging down GDP forecasts. The Economist Intelligence Unit estimates the housing slump could shave off up to 2.5% from GDP by 2027. JPMorgan warns that Chinese developers will account for two-thirds of all Asian corporate defaults this year.

To put that into perspective, garlic is now being accepted as a down payment—literally. One developer in Henan collected 430 tonnes of it in exchange for 30 apartments.

Garlic! At this rate, if you show up with a bag of onions and emotional trauma, they’ll throw in a second unit and name a floor after your dog.

Others have offered gold bars, holiday homes, and even stakes in private jet companies as incentives to lure buyers back into the market.

TikTok Tours and $1.30 Deposits

To compete in this chaotic market, realtors have gone full influencer. Livestreaming house tours on Douyin (China’s TikTok), agents perform comedy sketches or sing karaoke inside half-empty condos. A robot named “U-bro” now livestreams listings in Wuhan, answering questions like a real estate ChatGPT with a camera.

And forget six-figure down payments—one builder in Zhongshan offered apartments with just a 9.90 yuan ($1.30) deposit. That’s not a typo. For the struggling millennial trying to scrape together three years' worth of salary for a down payment on a starter home, we will let that sink in for a while.

But these antics speak to a brutal truth: demand has vanished. With fewer people buying, agents turn to spectacle, social media—and even seduction—to close deals.

The Tariff Tango: Why North America Should Care

Just days before these real estate scams hit the headlines, the Trump administration slapped a sweeping 34% tariff on Chinese goods, calling it a "reciprocal adjustment" to years of trade imbalance. This is on top of prior levies on autos, electronics, and fentanyl-related goods, pushing the average U.S. tariff on Chinese imports to a whopping 74%.

China retaliated, matching the 34% tariff and targeting U.S. exports from agriculture to automobiles. The tit-for-tat escalation is expected to further crimp Chinese growth, with forecasts predicting a 2.4% drop in GDP this year alone.

So, how does a garlic-backed condo in Henan affect housing in Houston or Halifax?

“China’s property market used to be a global liquidity sponge,” said Ryan Featherston, a research associate at CSIS. “When that demand disappears, it reshapes capital flows everywhere—from Vancouver to Miami.”

Investors once flocked to North American cities for asset diversification, driving up condo prices and speculative development. However, with Chinese capital now stuck at home and local demand in China evaporating, developers may redirect attention to more stable markets abroad—or liquidate overseas holdings to stay solvent.

Further, China is one of the largest foreign holders of U.S. mortgage-backed securities (MBS) with $1.32T in foreign MBS holdings as of January, 15% of the entire market. Analysts warn that China could escalate by dumping Treasurys or MBS in retaliation for U.S. tariffs, driving higher mortgage rates.

“If China wanted to hit us hard, they could unload Treasurys. Is that a threat? Sure it is,” said Guy Cecala of Inside Mortgage Finance. With the Federal Reserve simultaneously shrinking its MBS portfolio, such a selloff would spook investors and widen mortgage spreads, potentially crushing what little momentum is left in the spring housing market. After all, you can only throw so much garlic at a 7% mortgage rate.

The Global Ripple: A Risky Romance

North American cities should brace for both a cooling of foreign investment and a warming of competition. A downturn in China’s housing market could trigger a wave of outbound developers looking for safer bets—and a cascade of Chinese families cashing out overseas properties to cover domestic losses.

This might ease some pressure in cities already experiencing affordability crises. However, it also adds uncertainty to real estate valuations, just as interest rates and construction costs remain volatile.

In other words, if you’re trying to build or sell a condo in Toronto or Seattle right now, your biggest competitor might not be the guy across town—it might be a garlic bartering developer in Zhengzhou.

Conclusion: Buyer Beware

China’s “girlfriend agent” debacle might feel like satire, but it underscores a distressed market that even love is now a closing tactic. And with a full-blown trade war looming, what happens in Huizhou doesn’t stay in Huizhou.

Whether you’re a buyer in Beijing, a broker in Boston, or someone who thought dating apps were already risky enough, this is one more reminder: real estate is about trust. And lately, that’s in shorter supply than garlic.

SNIPPETS

1️⃣ Maple Exodus: There is a significant shift in the cross-border property market as Canadian vacation home owners rapidly sell U.S. properties due to political tensions and economic factors. Data shows a dramatic increase in Canadian property sales, with listings in the Phoenix area jumping from around 100 to 700 between January and March, and a 40% decline in Canadian buyers. The primary drivers are the weakening Canadian dollar, which has hit a 22-year low, and political rhetoric from the Trump administration suggesting potential annexation of Canada. Historically, Canadians were the largest foreign residential real estate buyers in the U.S., accounting for 23% of foreign purchases from 2010-2013 and still representing 13% last year. Notably, law firms are seeing a surge from 2-3 Canadian clients per week considering U.S. property sales to 20-30 clients weekly, indicating a potentially transformative trend in the vacation home market that investors should carefully monitor. (WSJ)

2️⃣ Distress Drop: The overall distress rate for commercial real estate dropped to 10.8%, with delinquency rates falling from 8.9% to 8.0% and special servicing rates decreasing to 10.1%. The office sector remains the most distressed at a record 19.3%, while multifamily sits at 13.0%. Notably, the "wider current" metric improved to 25.8%, and the combined performing and non-performing matured loans decreased from 61.7% to 56.4%, suggesting potential stabilization. Sectors like self-storage and industrial have normalized, with self-storage dropping to 2.0% and industrial to 0.5%. This could signal opportunities for strategic investors willing to navigate a complex market with targeted, sector-specific approaches. (CredIQ)

3️⃣ Tariff Insulation: Developers who completed over 1.1 million units in 2023-2024 have effectively insulated themselves from rising construction costs and potential tariffs, with some expecting rent increases up to 5% annually. The current housing landscape favors rentals, as high mortgage rates (above 6.5%) and economic uncertainty keep potential buyers in the rental market. CBRE forecasts that homeownership is approximately 30% more expensive than renting. While operational costs and maintenance pressures exist, the combination of peaked supply, strong demand, and potential barriers to new development creates a favorable environment for multifamily investors. (CRE Daily)

4️⃣ …& Apartment Appetite: The U.S. apartment sector is showing robust signs of stabilization, with record-breaking absorption of 138,000 market-rate units—the highest first-quarter demand in over 30 years. While supply remains high at nearly 577,000 units annually, demand is outpacing new construction, driving occupancy up to 95.2% in March, the highest since October 2022. Rent growth is modest but encouraging, with a 1.1% annual increase, particularly strong in Midwest markets like Kansas City and Chicago. At the same time, Sun Belt regions like Austin and Phoenix continue to see rent corrections. The economic backdrop is mixed, with steady employment but tempered consumer confidence, suggesting investors should expect a gradual, measured recovery in the multifamily sector with potential opportunities in regional markets showing consistent growth. (RealPage)

5️⃣ Sentiment Slump: Consumer sentiment is rapidly declining across income brackets, with both high and low-income households expressing significant economic pessimism. Job loss concerns have reached recession-level intensity, a record-high percentage of consumers believe business conditions are deteriorating, household income expectations are dropping, and inflation expectations are rising at an unprecedented rate. These interconnected factors suggest a challenging economic landscape that could impact real estate investment strategies, potentially leading to reduced consumer spending and increased market uncertainty. (Apollo)

6️⃣ Settled: Cortland, a major property management company, has settled a lawsuit involving the YieldStar revenue optimization software, agreeing to pay $100,000 in legal fees and discontinue using non-public data for rental price setting. The settlement spans eight states and includes restrictions on data sharing and third-party revenue management product usage. While this specific settlement provides some clarity, RealPage still faces ongoing litigation from the District of Columbia, Arizona, and multiple class action lawsuits, which suggests potential broader implications for property management tech platforms and rental pricing practices. (Propmodo)