Redfin Report: iBuyer Home Purchases Inch Back Toward Pre-Pandemic Levels

Rhea-AI Summary

In Q1 2021, top iBuying firms bought 4,383 homes, down 6.1% YoY but up 20.6% from Q4 2020. iBuyers made up only 0.5% of total home sales across 418 U.S. metropolitan areas, a slight increase from 0.3% in the previous quarter. The median purchase price by iBuyers was $302,050, compared to $320,000 for typical homebuyers. Homes sold by iBuyers averaged 13 days on the market, the fastest since 2015. Raleigh and Charlotte topped iBuyer markets, with iBuyers offering lower commissions to agents at 2.43%, reflecting market competitiveness.

Positive

• iBuyers increased home purchases by 20.6% compared to the previous quarter.
• iBuyers are selling homes at a record pace, averaging 13 days on the market.
• Raleigh and Charlotte show strong iBuyer market activity.

Negative

• iBuyers represent only 0.5% of total home sales, a decrease from 0.8% in 2019.
• Total home purchases by iBuyers declined 6.1% year-over-year.

SEATTLE, June 25, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — The nation's top iBuying companies purchased 4,383 homes in the first quarter of 2021, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. While that's down 6.1% from a year earlier, it's up 20.6% from the prior quarter—a sign that iBuyers are continuing to ramp up after pausing business at the beginning of the pandemic.

Still, iBuyers make up a tiny portion of the overall housing market, purchasing just 0.5% of homes that sold across the 418 U.S. metropolitan areas tracked by Redfin in the first quarter. That's down from a peak of 0.8% in the second half of 2019 but up from 0.3% in the fourth quarter of 2020.

The report is based on a Redfin analysis of MLS and public-records data on home purchases and sales made by well-known national iBuyers: RedfinNow (Redfin's iBuying business), Opendoor, Zillow Offers (Zillow's iBuying business), Offerpad and Bungalo.

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. iBuyers typically charge sellers a higher fee than a traditional real estate agent would given the certainty of a cash offer with a flexible move-out day and the convenience of avoiding home prep, showings and open houses. These companies then make any necessary improvements to the homes and resell them.

Real estate firms including Redfin, Zillow and Opendoor put iBuying on hold at the onset of the coronavirus pandemic amid economic uncertainty. These companies resumed their iBuying businesses in May and June of last year as housing demand began to rebound thanks to record-low mortgage rates and a wave of relocations made possible by remote work.

"Business really started ramping up in January and February. Since then, we've just had a constant barrage of deals," said Allister Booth, an acquisitions specialist at RedfinNow in Los Angeles. "We're back to full speed and are buying more homes than we were last year. After we buy and renovate those homes, we know we'll be able to sell them because there are so many more buyers in the market right now than there are homes available."

Raleigh and Charlotte Are Top Markets for iBuyers

In Raleigh, NC, iBuyers purchased 2.9% of the homes that sold during the first quarter—a larger share than any other top iBuyer market. Next came Charlotte, NC at 2.7%, Durham, NC and San Antonio, TX at 2.6%, Tucson, AZ at 2.3% and Phoenix at 2.2%.

iBuyers Purchase Less Expensive Homes Than the Typical Homebuyer

iBuyers bought homes for a median of $302,050 in the first quarter. By comparison, the median purchase price for the typical American homebuyer was $320,000. In every top iBuyer market*, iBuying companies purchased homes for less than the metro-area median.

iBuyers Are Selling Homes in 13 Days—A Record Pace

Nationally, the typical iBuyer-owned home found a buyer after 13 days on the market—the quickest pace since at least 2015, when Redfin began recording iBuyer data. That's down from 33 days a year earlier and a revised 18 days in the fourth quarter. By comparison, the typical home in the overall market spent 31 days on the market (also the quickest pace on record), down from 50 days a year earlier and unchanged from the prior quarter.

In a majority of the top iBuying markets, iBuyers sold their inventory faster than the typical homeowner, with the largest margins in Raleigh and Durham (30 days faster), and Tucson (29 days faster). Lakeland, FL, Charlotte and Portland, OR were the only top iBuyer markets where iBuyers took longer to sell homes.

iBuyers Offer Lower Commissions to Agents When They Sell Homes

When iBuyers sold homes in the first quarter, they offered a 2.43% average commission to the real estate agents representing the buyers, down from 2.67% a year earlier. That compares with a 2.66% average commission in the market overall during the first quarter.

iBuying companies have been experimenting with paying lower commissions to buyers' agents as a way to cut costs, which could allow them to make more competitive offers when purchasing homes themselves. This could put downward pressure on buyer's agent commissions across the industry, as data on these fees is becoming widely available to the public for the first time.

 

First-Quarter 2021 iBuyer Market Summary By U.S. Metro Area
U.S. Metro Area	Number of Homes Bought by iBuyers, YoY Change	Share of Homes Bought by iBuyers	Share of Homes Bought by iBuyers, YoY Change	iBuyer Median Sale Price	Overall Median Sale Price	iBuyer Median Days On Market	Overall Median Days On Market
Atlanta, GA	-25.6%	2.1%	-0.9 pts	$239,750	$290,000	14	19
Austin, TX*	7.7%	1.2%	0.0 pts	—	$400,000	7	28
Charlotte, NC	-10.1%	2.7%	-0.6 pts	$277,500	$304,000	40	38
Dallas, TX*	35.6%	1.8%	0.5 pts	—	$331,000	15	26
Durham, NC	12.2%	2.6%	0.1 pts	$262,500	$319,620	9	39
Fort Worth, TX*	-9.3%	2.1%	-0.2 pts	—	$279,995	15	23
Jacksonville, FL	-1.0%	1.3%	-0.3 pts	$246,400	$267,950	15	32
Lakeland, FL	290.0%	1.0%	0.7 pts	$220,800	$240,000	22	18
Las Vegas, NV	-3.3%	2.0%	-0.6 pts	$327,400	$330,000	14	36
Nashville, TN	-14.7%	1.5%	-0.4 pts	$290,900	$336,720	17	34
Orlando, FL	-15.0%	1.3%	-0.6 pts	$272,100	$296,000	16	19
Phoenix, AZ	-32.0%	2.2%	-1.4 pts	$332,300	$355,000	8	29
Portland, OR	16.3%	1.2%	0.1 pts	$440,100	$467,500	8	7
Raleigh, NC	-19.9%	2.9%	-0.9 pts	$280,500	$322,365	11	41
Sacramento, CA	25.3%	1.6%	0.2 pts	$452,000	$495,000	7	8
San Antonio, TX*	80.4%	2.6%	1.1 pts	—	$260,000	19	30
Tucson, AZ	3.0%	2.3%	-0.2 pts	$262,400	$275,000	13	42
National—U.S.A.	-6.1%	0.5%	-0.1 pts	$302,050	$320,000	13	31
*iBuyer median sale prices are not available in Texas metros due to limited public records data.

 

To read the full report, including charts and methodology, please visit: https://www.redfin.com/news/ibuyer-real-estate-q1-2021/

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 people.

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

FAQ

What were the iBuyer home purchase statistics for RDFN in Q1 2021?

Top iBuying firms purchased 4,383 homes in Q1 2021, down 6.1% year-over-year but up 20.6% from the previous quarter.

How much did iBuyers pay for homes in Q1 2021?

iBuyers had a median purchase price of $302,050 in Q1 2021.

What is the average selling time for iBuyer homes?

iBuyer-owned homes sold after an average of 13 days on the market in Q1 2021.

Which markets were the top for iBuyers in Q1 2021?

Raleigh, NC, and Charlotte, NC, were the top markets for iBuyers in Q1 2021.

What percentage of homes did iBuyers purchase in Q1 2021?

iBuyers purchased 0.5% of homes sold across the tracked U.S. metropolitan areas.