After a momentous year for iBuyers, where do instant offer companies like Offerpad, Opendoor and Redfin Now go from here? All February, Inman will dig into iBuyers to determine what the new year has in store, where opportunities lie for real estate agents and what brokerages should expect. It’s iBuyer Month at Inman.
Opendoor, the reigning champion of iBuying, announced Tuesday that it is pushing into one of the most competitive and challenging real estate markets in the world: the San Francisco Bay Area.
The announcement brings Opendoor’s total market count to 45. In a blog post Tuesday, Jessie Smith, the company’s general manager for Northern California, said that the launch will ultimately bring Opendoor’s services to “more than 200 zip Codes in several counties from Sonoma to Santa Clara.” Smith added that the launch means the company is “redefining how Bay Area homeowners move in the modern world,” and that about 60 percent of the homes in the region will be eligible for purchase by Opendoor.
“The reason we’re able to reach such an incredible breadth of homes? The strength of our pricing and operational capabilities,” Smith continued.
The post goes on to note that Opendoor’s Bay Area buy box — or the parameters within which it will make offers — includes houses built after 1940 that are valued between $400,000 and $2.5 million.
Opendoor’s move into San Francisco is significant both for the company and for the iBuying concept more generally. Opendoor first launched in 2014 and in doing so effectively created the home-flipping-with-technology idea. But even as iBuying gained steam and spurred competitors such as Offerpad and Zillow, much of the activity in the sector was focused on relatively affordable metro areas in the Sunbelt. Phoenix, Arizona, emerged as an early hotspot for Opendoor and other iBuyers, and in the years since , Texas and Florida have also become iBuying epicenters.
IBuyers have since pushed into more expensive markets, with Opendoor itself moving into Los Angeles in 2019. Redfin’s iBuyer, RedfinNow, is already active in the Bay Area.
But RedfinNow and other iBuyers are smaller players in the iBuying arena. It’s significant that the dominant player in the space now feels bullish enough regarding its scale and operational capacities that it is willing to tackle a market that is routinely listed as one of the most expensive and competitive in the world.
In her blog post Tuesday, Smith acknowledged the complexity of the Bay Area’s housing landscape, saying the region suffers from a “a notorious lack of available housing.”
It remains to be seen how big a deal the Bay Area can be for Opendoor’s bottom line, and if the Sunbelt remains the center of iBuying activity even as more expensive markets open up. Whatever happens, the news marks a new chapter in the iBuying story.
The timing of Opendoor’s announcement is significant as well. Just four months ago, Zillow announced plans to shutter its own iBuying business. The news left Opendoor as the undisputed champion of the space, but also prompted a debate about the future of iBuying.
Opendoor’s move into the San Francisco region suggests the company is not slowing down even amid rivals’ setbacks.
Tuesday’s blog post didn’t weigh in on these larger issues, but did note that Opendoor is based in San Francisco — meaning many company employees personally experienced the “broken process” and “stress and uncertainty” of buying a home in the area.
“Eight years later, our team has grown, and we’ve proudly helped more than 100,000 people buy or sell a home in more than 44 markets in the U.S.,” Smith wrote in the post. “Today, we’re coming full circle by launching one of our largest markets to date right here at home in the San Francisco Bay Area.”
Correction: Opendoor operates in 45 markets. This post originally reported the company was in 44 markets.