{"id":70214,"date":"2020-09-11T04:55:57","date_gmt":"2020-09-11T11:55:57","guid":{"rendered":"https:\/\/www.redfin.com\/blog\/?p=70214"},"modified":"2020-10-07T17:38:42","modified_gmt":"2020-10-08T00:38:42","slug":"ibuyer-real-estate-q2-2020","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/ibuyer-real-estate-q2-2020\/","title":{"rendered":"iBuyer Activity Ground to a Halt in the Second Quarter, With Market Share Plummeting to 0.1%"},"content":{"rendered":"

iBuyers purchased the fewest homes in more than three years last quarter as the coronavirus pandemic put business on pause. But the market is now making a comeback, with iBuyers seeing a rebound in demand\u2014and even bidding wars\u2014from homeowners who are in search of quick cash and a safe way to sell during the pandemic.<\/span><\/i><\/h2>\n

The nation\u2019s top iBuyers bought 880 homes in the second quarter, or 0.1% of homes that sold across the 418 U.S. metros tracked by Redfin, as they slowly reopened after suspending business at the beginning of the coronavirus pandemic. That\u2019s down 88% from 7,410 homes, or 0.6% market share, a year earlier and represents the smallest number of properties purchased by iBuyers since the first quarter of 2017. In dollar terms, iBuyers spent just $195 million buying homes, compared with $1.6 billion a year earlier. This is according to a Redfin analysis of MLS and public records data on home purchases and sales made by the most well-known national iBuyers, including RedfinNow<\/a>, Opendoor, Zillow and Offerpad.<\/span><\/p>\n

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The term \u201ciBuyer\u201d (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\u2019s 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 and resell the homes.<\/span><\/p>\n

Real estate firms including Redfin, Zillow and Opendoor announced in March that they were pausing iBuying as the coronavirus began to take a toll on the economy. In May and June, with housing demand rebounding, they started to reopen their iBuying programs in select markets. <\/span>While iBuyer market data isn’t yet available for July and August, Jason Aleem, vice president of RedfinNow, said he has seen a major uptick in demand over the last few months.<\/span><\/p>\n

\u201cThe pandemic has brought a lot of folks into the market who need liquidity, certainty and a safe and contactless way to sell their home,\u201d Aleem said. \u201cWe\u2019re working with several move-up buyers who need a bigger house with room to work from home, as well as parents moving closer to their adult children.\u201d<\/span><\/p>\n

\u201cOne trend that has ramped up since the pandemic began is the iBuyer bidding war,\u201d Aleem continued. \u201cHomeowners are seeking out offers from multiple iBuyers so they can feel confident they are getting the best possible price in this blazing hot market without a bunch of foot traffic coming through. As a result, iBuyers are making more competitive offers.\u201d<\/span><\/p>\n

In the second quarter\u2014before iBuying activity had substantially picked back up\u2014all of the 14 U.S. metro areas where iBuyers purchased at least 20 homes experienced a decline in market share from a year earlier. Phoenix saw the most significant slump, with iBuyers acquiring 0.8% of homes that sold there, down 3.3 percentage points from the second quarter of 2019. Raleigh and Las Vegas saw the second and third biggest drops, falling 2.9 and 2.7 percentage points, respectively. They were followed by Fort Worth and Charlotte.<\/span><\/p>\n

Despite Phoenix\u2019s outsized loss, its 0.8% market share was the highest among the top 14 iBuyer markets. Raleigh and Charlotte came in second and third place, both at 0.6%. Las Vegas and Atlanta rounded out the top five, at 0.5% and 0.4%, respectively.<\/span><\/p>\n

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iBuyers Sold Homes Much Faster Than Last Year in the Second Quarter<\/span><\/h2>\n

Across the 14 largest iBuying markets in the second quarter, iBuyer-owned homes found a buyer after being listed on the market for a median of 13 days, down from 40 days a year earlier. A typical, non-iBuyer home spent 37 days on the market, unchanged from a year prior.<\/span><\/p>\n

In 13 of the 14 top iBuying markets, iBuyers sold their inventory faster than a typical homeowner, with the largest margins in Raleigh (38 days faster), Riverside, CA (37) and Phoenix (33). The only metro where iBuyers took longer to sell homes was Minneapolis.\u00a0<\/span><\/p>\n

\u201cBack in early spring when the market was reeling, RedfinNow was very aggressive with our listing prices and price drops, which helped us sell homes faster,\u201d Aleem said. \u201c<\/span>Redfin\u2019s Direct Access<\/span><\/a>, which allows buyers to use our app to tour listings without an agent, also made it safe, fast and easy for buyers to tour our homes, all of which are vacant. The buyers\u2019 agents we worked with told us our homes were selling in part because their clients felt comfortable touring them on their own.\u201d<\/span><\/p>\n

iBuyers Bought Less Expensive Homes Than Last Year in the Second Quarter<\/span><\/h2>\n

iBuyers bought homes for a median of $241,100 in the second quarter, down from $250,000 a year earlier. In every top iBuyer market* aside from Riverside, CA, iBuyers purchased homes for less than the metro-area median.<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Metro Area<\/b><\/td>\nShare of Homes Bought by iBuyers, Q2 2020<\/b><\/td>\nShare of Homes Bought by iBuyers, Q2 2019<\/b><\/td>\nHomes Bought by iBuyers, Q2 2020<\/b><\/td>\nHomes Bought by iBuyers, Q2 2019<\/b><\/td>\nMedian Days On Market for iBuyer Homes, Q2 2020<\/b><\/td>\nMedian Days On Market for iBuyer Homes, Q2 2019<\/b><\/td>\nMedian Price of Homes Bought by iBuyers, Q2 2020\u00a0<\/b><\/td>\nMedian Price of Homes Bought by iBuyers, Q2 2019\u00a0<\/b><\/td>\n<\/tr>\n
Atlanta, GA<\/span><\/a><\/td>\n0.4%<\/span><\/td>\n2.6%<\/span><\/td>\n118<\/span><\/td>\n1,041<\/span><\/td>\n13<\/span><\/td>\n45<\/span><\/td>\n $195,000<\/span><\/td>\n$213,950<\/span><\/td>\n<\/tr>\n
Charlotte, NC<\/span><\/a><\/td>\n0.6%<\/span><\/td>\n2.9%<\/span><\/td>\n81<\/span><\/td>\n508<\/span><\/td>\n42<\/span><\/td>\n33<\/span><\/td>\n $214,000<\/span><\/td>\n$221,500<\/span><\/td>\n<\/tr>\n
Dallas, TX<\/a>*\u00a0<\/span><\/td>\n0.2%<\/span><\/td>\n2.2%<\/span><\/td>\n37<\/span><\/td>\n423<\/span><\/td>\n11<\/span><\/td>\n52<\/span><\/td>\n $\u00a0 \u00a0 \u00a0 \u00a0 –\u00a0<\/span><\/td>\n $\u00a0 \u00a0 \u00a0 \u00a0 –\u00a0<\/span><\/td>\n<\/tr>\n
Denver, CO<\/span><\/a><\/td>\n0.2%<\/span><\/td>\n1.7%<\/span><\/td>\n22<\/span><\/td>\n317<\/span><\/td>\n8<\/span><\/td>\n46<\/span><\/td>\n $400,000<\/span><\/td>\n$388,600<\/span><\/td>\n<\/tr>\n
Fort Worth, TX<\/a><\/span>*<\/td>\n0.3%<\/span><\/td>\n2.6%<\/span><\/td>\n22<\/span><\/td>\n255<\/span><\/td>\n16<\/span><\/td>\n41<\/span><\/td>\n $\u00a0 \u00a0 \u00a0 \u00a0 –\u00a0<\/span><\/td>\n $\u00a0 \u00a0 \u00a0 \u00a0 –\u00a0<\/span><\/td>\n<\/tr>\n
Houston, TX<\/a>*\u00a0<\/span><\/td>\n0.2%<\/span><\/td>\n2.4%<\/span><\/td>\n40<\/span><\/td>\n622<\/span><\/td>\n14<\/span><\/td>\n72<\/span><\/td>\n $\u00a0 \u00a0 \u00a0 \u00a0 –\u00a0<\/span><\/td>\n $\u00a0 \u00a0 \u00a0 \u00a0 –\u00a0<\/span><\/td>\n<\/tr>\n
Las Vegas, NV<\/span><\/a><\/td>\n0.5%<\/span><\/td>\n3.2%<\/span><\/td>\n40<\/span><\/td>\n 423<\/span><\/td>\n15<\/span><\/td>\n42<\/span><\/td>\n $268,450<\/span><\/td>\n$276,800<\/span><\/td>\n<\/tr>\n
Minneapolis, MN<\/span><\/a><\/td>\n0.1%<\/span><\/td>\n0.6%<\/span><\/td>\n22<\/span><\/td>\n126<\/span><\/td>\n23<\/span><\/td>\n57<\/span><\/td>\n $255,450<\/span><\/td>\n$241,200<\/span><\/td>\n<\/tr>\n
Nashville, TN<\/span><\/a><\/td>\n0.2%<\/span><\/td>\n1.1%<\/span><\/td>\n21<\/span><\/td>\n146<\/span><\/td>\n38<\/span><\/td>\n42<\/span><\/td>\n $239,100<\/span><\/td>\n$244,900<\/span><\/td>\n<\/tr>\n
Orlando, FL<\/span><\/a><\/td>\n0.3%<\/span><\/td>\n1.4%<\/span><\/td>\n37<\/span><\/td>\n215<\/span><\/td>\n18<\/span><\/td>\n44<\/span><\/td>\n $230,500<\/span><\/td>\n$247,016<\/span><\/td>\n<\/tr>\n
Phoenix, AZ<\/a> <\/span><\/td>\n0.8%<\/span><\/td>\n4.1%<\/span><\/td>\n203<\/span><\/td>\n1,416<\/span><\/td>\n5<\/span><\/td>\n28<\/span><\/td>\n $257,000<\/span><\/td>\n$245,050<\/span><\/td>\n<\/tr>\n
Raleigh, NC<\/span><\/a><\/td>\n0.6%<\/span><\/td>\n3.5%<\/span><\/td>\n53<\/span><\/td>\n331<\/span><\/td>\n11<\/span><\/td>\n27<\/span><\/td>\n $218,500<\/span><\/td>\n$240,000<\/span><\/td>\n<\/tr>\n
Riverside, CA<\/span><\/a><\/td>\n0.2%<\/span><\/td>\n1.1%<\/span><\/td>\n22<\/span><\/td>\n202<\/span><\/td>\n11<\/span><\/td>\n45<\/span><\/td>\n $399,500<\/span><\/td>\n$394,000<\/span><\/td>\n<\/tr>\n
Tampa, FL<\/span><\/a><\/td>\n0.2%<\/span><\/td>\n1.0%<\/span><\/td>\n35<\/span><\/td>\n227<\/span><\/td>\n24<\/span><\/td>\n33<\/span><\/td>\n $243,400<\/span><\/td>\n$211,300<\/span><\/td>\n<\/tr>\n
National \u2014 U.S.A.<\/b><\/td>\n0.1%<\/b><\/td>\n0.6%<\/b><\/td>\n880<\/b><\/td>\n7,410<\/b><\/td>\n13<\/b><\/td>\n40<\/b><\/td>\n $241,100<\/b><\/td>\n$250,000<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

*Median sale prices are not available in Texas metros due to limited public records data. <\/span><\/i><\/p>\n

Methodology<\/span><\/h2>\n

To identify purchases made by iBuyers, we analyzed public records data of home sales across all the markets that Redfin covers. To determine iBuyer market share, we divided homes sold across all of the markets that Redfin covers by all known home purchases made by RedfinNow, Opendoor, Offerpad, Zillow Offers and Bungalo. There are numerous other companies that engage in iBuying in various markets, however Redfin tracks only the most prominent, national iBuyers.<\/span><\/p>\n

In the last <\/span>iteration<\/span><\/a> of this report, we determined the top iBuying markets by identifying the metro areas where iBuyers had a market share of at least 1%. No metros met that requirement during the second quarter of 2020, so for this report, we analyzed the 14 metros where iBuyers bought at least 20 homes. The 14 metros were:<\/span><\/p>\n