After a dramatic drop in sales during the height of the pandemic, the nation’s four largest iBuyers are back on track, according to a new Zillow report released on Tuesday.
Zillow Offers, Opendoor, RedfinNow and Offerpad collectively reached a 1 percent market share in the second quarter, placing all four on track to have a record-breaking third quarter as home sales keep their year-long momentum.
“The growing number of homeowners using an iBuyer service clearly demonstrates that sellers desire an easier way to sell their homes, with more certainty and less stress, even in a hot sellers market,” Zillow Chief Operating Officer Jeremy Wacksman said in a written statement.
In Q2 2021, homeowners used an iBuying service to complete a record-breaking 15,000 home sales worth a whopping $5.3 billion — a 114 percent increase from Q1’s sales volume. The previous record was in Q3 2019 when homeowners used an iBuying service to complete 10,400 home sales worth $2.8 billion.
Atlanta, Phoenix and Dallas had the most iBuyer activity in Q2, and iBuyers accounted for 5 percent of all sales in Phoenix, Charlotte and Atlanta during the same quarter. IBuyer-purchased homes sold within 64 days with the median price for an iBuyer-sold home being 3.6 percent more than the overall U.S. median sale price.
In 23 of the 33 largest iBuyer markets, the median price for homes iBuyers purchased was within 10 percent of the market’s overall median sale price, and in those markets, the overall median sale price grew 9.1 percent from the first quarter of 2021.
Lastly, iBuyers experienced a premium of 9.6 percent during Q2, reflecting the boom in home value appreciation throughout the pandemic, the report read.
“IBuyers remove some of the traditional home selling pain points, unsticking homeowners previously put off by the hassles of selling a home or worried about timing their next purchase,” Wacksman said of iBuyers’ explosive growth during the past quarter. “This brings net-new inventory to the market, mainly at an affordable price point near the middle of the market, adding liquidity to the market that has traditionally been difficult for consumers to navigate.”
Zillow’s report echoes real estate strategist Mike DelPrete’s July report detailing iBuyers’ success during the pandemic, which flies in the face of naysayers’ theories the business model couldn’t thrive during a strong sellers’ market. “For anyone concerned that the iBuyer model wouldn’t be popular in a seller’s market, the evidence shows that it is resonating with consumers more than ever, and market conditions are in fact fueling its growth,” he said.
Although iBuyers are purchasing homes for more than ever before, DelPrete said they’re also able to sell them for more than before, thanks to a boom in home values and homebuyer demand.
“For example, in Q1 of 2020, Opendoor sold around 5,000 homes,” he said. “At an average of $250,000 each, that’s around $1.2 billion in revenue. But at an average of $350,000, revenue would be $1.7 billion — a 40 percent increase driven by home values alone and not volume.”
“The iBuyers will have blow-out quarters with record revenues, driven by high purchase and sale volumes and the rise in home values,” he added.