iBuyer Market Continues Slow Recovery, With Decline In Home Purchases Narrowing to 48% In the Fourth Quarter
In the fourth quarter of 2020, top iBuying companies, including Redfin, purchased 3,505 homes, down 48% from the previous year, representing 0.3% of homes sold across 418 U.S. metro areas. Despite a recovering housing demand spurred by low mortgage rates, iBuying remains constrained by limited inventory. In Phoenix, iBuyers held a market share of 2.1%. iBuyers' median purchase price was $284,450, lower than the typical buyer's $318,300. Homes sold by iBuyers found buyers after just 14 days, the fastest pace since 2015.
- iBuyers sold homes at a record pace of 14 days, significantly faster than the typical 30 days.
- The iBuyer market share is gradually improving as inventory conditions stabilize post-pandemic.
- Total home purchases by iBuyers decreased by 48% year-over-year.
- iBuyers purchased fewer homes due to a limited supply in the hot housing market.
SEATTLE, March 11, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — The nation's top iBuying companies purchased 3,505 homes in the fourth quarter of 2020, down
Redfin analyzed MLS and public records data on home purchases and sales made by the most well-known national iBuyers, including RedfinNow (Redfin's iBuying business), Opendoor, Zillow and Offerpad for the report. The fourth quarter is the most recent period for which iBuyer data is available.
The term "iBuyer" (short for instant buyer) is used to describe real estate companies that purchase houses from homeowners in quick cash transactions by using algorithms to evaluate a property's worth based on comparable market data. Real estate firms including Redfin, Zillow and Opendoor put iBuying on hold at the onset of the coronavirus pandemic amid substantial economic uncertainty. These companies resumed their iBuying businesses in May and June as housing demand began to rebound thanks to record-low mortgage rates and a wave of relocations made possible by remote work.
Still, business remains slower than usual, in part because the housing market is so hot. With homebuyer demand through the roof, many sellers figure they can offload their homes without having to share the profits. Plus, an intense shortage of homes for sale means there aren't as many properties for iBuyers to purchase in the first place.
"We're being very aggressive when it comes to buying homes right now—it's all gas, no brakes," said Myron Curry, a senior investment specialist at RedfinNow in the Los Angeles area. "The primary reason iBuyer home purchases remain lower than normal is the lack of homes for sale, but the inventory situation is improving each quarter as we get further away from the worst of the pandemic. People are becoming more comfortable selling their homes as a larger share of the population gets vaccinated."
Phoenix Kept Its Crown as the Metro With the Highest iBuyer Market Share
In Phoenix, iBuyers purchased
iBuyers Purchased Less Expensive Homes Than the Typical Homebuyer
iBuyers bought homes for a median of
iBuyers Sold Homes In 14 Days—A Record Pace
Nationally, the typical iBuyer-owned home found a buyer after being listed on the market for 14 days—the quickest pace since at least 2015, when Redfin began recording iBuyer data. That's down from 42 days a year earlier and a revised 17 days in the third quarter. By comparison, the typical non-iBuyer home spent 30 days on the market, down from 46 days a year earlier and 33 days in the third quarter.
"Most homes that RedfinNow puts on the market in Los Angeles are selling within the first week and getting multiple offers," Curry said. "This lightning-fast market has been fueled by a shortage of homes for sale and surging demand due to low mortgage rates. Our properties are also renovated and move-in ready, which means the process typically moves quickly."
In a majority of the top 27 iBuying markets, iBuyers sold their inventory faster than the typical homeowner, with the largest margins in Austin, TX (29 days faster), Riverside, CA (28 days faster) and Raleigh (27 days faster). Minneapolis, Tampa, FL and San Diego were the only metros where iBuyers took longer to sell homes.
To read the full report complete with graphs and metro-level data, please visit: https://www.redfin.com/news/ibuyer-real-estate-q4-2020
About Redfin
Redfin (www.redfin.com) is a technology-powered residential real estate company, redefining real estate in the consumer's favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we also run the country's #1 nationwide brokerage website, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 95 markets in the United States and Canada. Since our launch in 2006, we have saved our customers nearly
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.
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SOURCE Redfin
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