SEATTLE, Sept. 11, 2020 /PRNewswire/ -- (NASDAQ: RDFN) — The nation's top iBuyers bought 880 homes in the second quarter, or 0.1% of homes that sold across more than 400 U.S. metros, according to an analysis from Redfin (www.redfin.com), the tech-powered real estate brokerage. That is 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. All of the major iBuyers, including RedfinNow, Opendoor, Zillow and Offerpad, suspended purchases at the beginning of the coronavirus pandemic and began to slowly reopen in May and June as the housing market began to recover. In dollar terms, iBuyers spent just $195 million buying homes in the second quarter, compared with $1.6 billion a year earlier.
The Redfin analysis used MLS and public records data to identify home purchases and sales made by the most well-known national iBuyers. The term "iBuyer" (short for instant buyer) is used to describe real estate companies that purchase houses from homeowners in quick, cash transactions. These companies then make any necessary improvements and resell the homes.
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.
"The pandemic has brought a lot of folks into the market who need liquidity, certainty and a safe and contactless way to sell their home," Aleem said. "RedfinNow is 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."
"One trend that has ramped up since the pandemic began is the iBuyer bidding war," Aleem continued. "Homeowners 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."
In the second quarter, Phoenix saw the most significant slump in iBuyer market share, 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. Despite Phoenix's outsized loss, its 0.8% market share was the highest among the top 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.
iBuyers Sold Homes Much Faster Than Last Year in the Second Quarter
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.
"Back 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," Aleem said. "Redfin's Direct Access, 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' agents we worked with told us our homes were selling in part because their clients felt comfortable touring them on their own."
iBuyers Bought Less Expensive Homes Than Last Year in the Second Quarter
iBuyers bought homes for a median of $241,100 in the second quarter, down from $250,000 a year earlier. In all but one iBuyer market where sale price data is available, iBuyers purchased homes for less than the metro-area median. The only exception was Riverside, CA, where the median iBuyer purchase was $400,000, approximately $6,000 higher than the metro-area median sale price.
The full report complete with charts, metro-level data and methodology is available at: https://www.redfin.com/blog/ibuyer-real-estate-q2-2020.
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 real estate brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Since our launch in 2006, we have saved our customers over $800 million and we've helped them buy or sell more than 235,000 homes worth more than $115 billion.
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 [email protected]. To view Redfin's press center, click here.