Home purchases based on instant cash offers picked back up in the first quarter of 2021, representing a step forward for a budding segment of the industry that had been sidelined earlier in the pandemic.
The number of these purchases by major iBuyers rose more than 20 percent from the previous quarter, according to data released Friday by tech-based brokerage Redfin. These instant-cash purchases remained down 6 percent year over year, signaling their recovery is still ongoing.
“Business really started ramping up in January and February,” RedfinNow Acquisitions Specialist Allister Booth said in the statement. “Since then, we’ve just had a constant barrage of deals.”
The Seattle-based company based its analysis on its own RedfinNow iBuyer service, as well as MLS records of purchases by Zillow Offers, Opendoor, Offerpad and Bungalo.
This new type of deal, in which companies extend instant cash offers to homeowners and later resell the homes, still makes up a small share of the home market.
Even after the number of iBuyer purchases rose in the first quarter, they made up only 0.5 percent of homes sold in the metro areas Redfin tracked. That’s down from 0.8 percent in the fourth quarter of 2019.
Several real estate companies put their iBuyer services on hold in the early days of the pandemic, a measure that reflected heightened economic uncertainty at the time, Redfin said. They resumed iBuying in May and June of last year, and have been building this portion of their business back up ever since as demand for homes has boomed.
Redfin’s report also found that iBuyers tended to purchase homes on the lower end of the market. The median sale price of an iBuyer purchase was $302,050 in the first quarter of the year — roughly $18,000 lower than the median price for a typical transaction.
Once iBuyers got their hands on homes, they had little trouble finding a buyer, Redfin reported. Homes owned by these firms found a buyer after 13 days on the market, the fastest pace on record for this type of transaction. The typical home in Redfin’s analysis spent 31 days on the market over that same span.