In a financial market (e.g: stocks) 1 share owned an individual investor is just as good as 1 share owned by an institutional investor: they have identical representation. The financialization of housing glosses over the fact the some houses will have foundational issues, need new roofs in a year, etc but you can't see that when you treat all houses as if they were shares, which seems like Zillow did, or by the nature of the asset class, sellers with low-quality product dumped for high prices.

Maybe Zillow went wrong because they deployed too much capital too quickly. With the opportunity to be selective, they could have found homes with 'good bones' that were under-priced. But if the executives mandated X billions of purchases in Y months, you move downstream to progressively less good deals, due to your own insatiable demand, when housing stock is already extremely low. That's not the AI/ML team's fault. That's you simply taking what you can get.