Study: About 1% of homes sold in 2019 went to an iBuyer, but while Orlando ranked 13th nationally (No. 1 in Fla.), only 2.2% of its home sales involved an iBuyer – and it was one of the few cities to see a decline compared to its 2018 iBuyer sales (2.6%).
Raleigh, N.C., led the nation with the highest market share of iBuying activity in 2019, followed by Phoenix, Charlotte and Atlanta, according to new study on iBuyers released by Redfin. Redfin used MLS and public records data on home purchases and sales to track national iBuyer purchases from firms like Opendoor, Zillow, Offerpad and RedfinNow.
iBuyers are a growing group of companies that use technology to pitch instant offers to home sellers. They’ll purchase homes in all-cash transactions, allowing sellers to pick the closing date and bypassing selling publicly on the MLS. iBuyers tend to charge sellers a higher fee than a traditional real estate agent for the convenience.
A growing group of Wall Street-backed iBuying firms are competing for home sellers, but brokerages – like Keller Williams, Redfin, and Coldwell Banker – are jumping in with their own spin on instant offers as well.
While iBuyers present a new and growing element of the real estate market, however, they didn’t play a big factor in overall 2019 sales. In the 200 metro areas of the study, iBuyers purchased only one out of every 100 homes (1%). However, that’s almost double their market share in 2018.
Raleigh had the highest iBuyer market share in the country with 7.3% of homes purchased by an instant offer (up from 3.9% in 2018). Phoenix had 5.9% of its housing inventory purchased by an iBuyer, followed by Charlotte. N.C., and Atlanta (5.2% each) and Las Vegas at 4.1%.
Florida had three cities in the iBuyer top 20: No. 13, Orlando, had iBuyers involved in 2.2% of its 2019 home purchases (a decline from 2.6% in 2018). At No. 16, Jacksonville had 1.9% (0% in 2018). And at No. 18, Tampa had 1.5% (1.2% in 2018).
By numbers alone, Phoenix had the largest number of homes purchased by an iBuyer in 2019 at more than 5,200, followed by Atlanta at more than 4,300 and Houston at 2,100.
“It’s no surprise Raleigh and Phoenix led the nation in iBuyer share because those housing markets are iBuyer sweet spots and are poised for price growth in 2020,” says Daryl Fairweather, Redfin’s chief economist. “These markets work well for iBuyers, which tend to purchase homes that are relatively affordable, were built within the last few decades and are easy to price accurately because they are located in tract neighborhoods with largely homogenous housing stock. iBuyers also try to buy homes that will likely retain or increase in value over the short period between purchase and sale. Our forecasts indicate that both Phoenix and Raleigh will have strong price growth in 2020.”
Fairweather predicts that those metros experiencing strong iBuyer activity will also likely see a 2020 growth in home sales.
“It’s a seller’s market right now, but this can be a double-edged sword for sellers who also are looking to buy,” Fairweather says. “iBuyers are a big help for folks who need the equity from their current home to buy the next, and who want the flexibility of lining up their sale with the purchase of their new home. Homeowners who may have been reluctant to sell because they were concerned about carrying two mortgages or worried about the stress of choreographing two transactions may be persuaded by the convenience of an iBuyer sale.”
Source: “Raleigh Led the Nation in iBuyer Market Share in 2019, Followed by Phoenix, Charlotte and Atlanta,” Redfin Blog (Feb. 25, 2020)
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