The so-called “iBuyer” movement is still young, but a new report sheds light on its growing impact on real estate.
Redfin released its first-ever quarterly report focused on iBuyers — the growing and competitive group of companies that buy and sell homes directly, including Zillow Group, Opendoor, Offerpad, and yes, Redfin. In 18 markets where iBuyers are the most active, they made up 3.1 percent of homes sold in the quarter, up from 1.6 percent the prior year.
Zillow went all-in on iBuying earlier this year, and just a few months into the transformation, home sales already make up the majority of the company’s business. Redfin’s iBuyer arm, RedfinNow, has become a major driver of growth, but the company is taking a slower approach to expanding the program compared with Zillow. The Seattle real estate titans are battling it out with rivals like Opendoor and Offerpad that pioneered the iBuyer market.
The top iBuyer market in Redfin’s study was Raleigh, N.C., with the four companies accounting for 6.8 percent of home sales in the third quarter, up from 3.8 percent a year ago. Raleigh edged out Phoenix, which Redfin referred to as the “birthplace of the iBuyer movement.”
The report found that iBuyers move houses faster than regular sellers and are selling them at lower prices. Median prices of homes sold by iBuyers fell in 17 of 18 markets in the third quarter compared to the year before, despite overall home prices rising in all markets.
The iBuyer movement is thriving in markets where homes are priced at or below the national median of $313,200. Redfin notes that lower-priced homes sell faster than expensive ones, making it easier for iBuyers to get through their inventory quickly and continue refining their processes.
“iBuyers are concentrating their efforts in southern markets where both home sales and prices are poised for strong growth,” said Redfin chief economist Daryl Fairweather. “We think that iBuyers are likely to accelerate home sales in these markets. Homeowners who may have been reluctant to sell because they didn’t want to deal with the hassle may be persuaded by the convenience of an iBuyer sale.”
The iBuyers have yet to expand to the nation’s most expensive markets and those with the most tech jobs. A recent report found that five cities — Seattle, San Francisco, San Jose, San Diego, and Boston — are responsible for about 90 percent of all tech job growth. San Diego is the only market among those cities with an iBuyer presence, and Zillow is the only one there.