Prior to the pandemic, real estate professionals were growing concerned about how Wall Street–backed instant offer companies, known as iBuyers, could impose on their business. But the pandemic has greatly impacted the real estate model’s viability.
iBuying companies purchased just 0.3% of the homes sold in the fourth quarter of 2020, up slightly from 0.2% in the third quarter, according to new research from Redfin. The report analyzed data from MLSs and public records about purchases and sales made by iBuyers like RedfinNow, Opendoor, Zillow, and Offerpad.
Broken out, the nation’s leading iBuying companies purchased 3,505 homes in the fourth quarter of 2020, which is down 48% from a year earlier, according to Redfin.
The overall housing market has been booming, and sellers are showing a preference for working with a real estate professional to nab top dollar for their home on the MLS. Bidding wars have become practically the norm for those who do. Further, an inventory shortage means there are fewer homes for iBuyers to purchase.
Still, “we’re being very aggressive when it comes to buying homes right now—it’s all gas, no brakes,” says 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.”
iBuyers purchased homes for a median of $284,450 in the fourth quarter, which is less than the median purchase price nationwide of $318,300. The largest market share of iBuyer purchases were in:
- Phoenix (2.1% of homes sold during the fourth quarter)
- Raleigh, N.C. (1.9%)
- Atlanta (1.6%)
- Charlotte, N.C. (1.5%)
- San Antonio (1.5%).