Agent Offfers
Realty Times TV

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

Written by Posted On Saturday, 26 June 2021 06:53
Redfin Report: iBuyer Home Purchases Inch Back Toward Pre-Pandemic Levels

The year-over-year decline in iBuyer home purchases narrowed to 6% in the first quarter, when iBuyers snatched up 4,383 homes

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/

Rate this item
(0 votes)
Redfin

Redfin is a technology-driven real estate company with the country's most-visited real estate brokerage website. As part of Rocket Companies (NYSE: RKT), Redfin is creating an integrated homeownership platform from search to close to make the dream of homeownership more affordable and accessible for everyone. Redfin’s clients can see homes first with on-demand tours, easily apply for a home loan with Rocket Mortgage, and save thousands in fees while working with a top local agent. You can find more information about Redfin and get the latest housing market data and research at Redfin.com/news. For more information about Rocket Companies, visit RocketCompanies.com.

https://www.redfin.com

Latest from Redfin

back to top

Agent Resource

Before You List

Today's Headlines

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.

Links

Sections

Search

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries