Despite iBuyers’ overall small share in the housing market, their fast growth in 2019 is turning heads in the housing industry. iBuyers are buying more homes, expanding into new markets, and turning around houses 15 days sooner than they did the year prior in the 21 largest iBuying markets. But the question of profitability is still up in the air as companies race to grow their business and push through any growing pains, which in Zillow Offer’s case are substantial: In 2019, they lost an average of $6,400 on each home sold.
One of every 100 homes sold nationally in 2019 were sold to real estate companies known as iBuyers, which make online offers on homes, according to a Redfin analysis of public records and multiple listing service data. Houston was a major market for the phenomenon, with home owners selling more than 2,100 homes to iBuyers, third only to Atlanta and Phoenix.
Opendoor, Zillow Offers, Offerpad, RedfinNow and other iBuyers doubled their share of home purchases in 2019 from the year before, an increase facilitated by entering a rash of new markets and increasing their purchases in existing markets. These iBuyers went from purchasing 0.1 percent of the Houston homes sold in 2018 to 3 percent in 2019.
Once an iBuyer purchases a home, it makes minor repairs and relists the home for sale, taking on the insurance, tax, utility and maintenance costs until the home is sold, making a fast turnaround paramount for profitability. According to Redfin, iBuyers turned homes around more quickly in 2019 than the year before. In the 21 largest iBuying markets, iBuyers shrank the median time they owned homes to 38 days in 2019 from 53 days in 2018.