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Companies that make instant cash offers for homes in an effort to fix and flip them later remained busy in the first quarter of 2022, even as Zillow continued to wind down its iBuyer operations.
Homeowners sold 12,652 homes to Opendoor, Offerpad and the soon-to-be-defunct Zillow Offers in the first three months of the year in 43 major markets, accounting for 1.3 percent of homes sold in that time.
These numbers, from Zillow’s latest iBuyer report, represent a decline in market share from the previous quarter, when the three iBuyers combined for 1.7 percent of all purchases.
“The decline in sales using an iBuying service and iBuyer market share is primarily due to two factors: the winding down of Zillow Offers and an overall slowdown in home sales in the broader market, largely because of record-low inventory,” the report reads. “Zillow data shows U.S. home sales fell 21% quarter over quarter in Q1.”
Still, it’s been a strong stretch for this class of instant-cash-offer buyer, which for years had poured resources into expansion, but collectively struggled to breach the 1 percent threshold. Now they’ve beaten that mark in each of the last three quarters.
After buying and repairing the homes, iBuyers also hit their highest marks ever for resales in the first quarter, with 26,537 homes repaired and resold. It’s a dramatic rise in the number of transactions completed by iBuyers, more than doubling the sales total 10,738 in the third quarter of 2021, which was a record at the time.
These companies also continued to benefit from better markups on resales, Zillow’s report found. The eventual sale price on the typical iBuyer home was 14 percent higher than the original purchase price.
Despite this progress in other areas, the fall of Zillow’s iBuying venture in November was a significant setback for overall iBuyer activity.
Zillow closed on its final home purchases in January, amounting to just over 200 purchases, company spokesperson Viet Shelton said in an email.
The real estate listing portal company had previously been one of the two biggest players in the iBuyer space, alongside Opendoor.
In some large markets, the percentage of homes purchased by iBuyers was nearly five times the share nationwide.
In Atlanta, the three biggest iBuyers scooped up 1 in 17 homes that sold in the first quarter of 2022. The same companies secured an even greater share of the homes sold in Tucson, Arizona.
These iBuyers also accounted for at least 1 in 20 home purchases in the greater metro areas of Phoenix, Dallas, San Antonio, and the North Carolina markets of Charlotte and Winston-Salem.