It’s safe to say that iBuying made waves in the housing market in 2019.
From Zillow to Opendoor, the instant buyer conversation dominated the internet and the real estate industry, evolving and changing the way consumers purchase a home.
While Phoenix was seen as the petri dish of the experimental iBuyers market, it’s Raleigh, North Carolina, that turned out to have the most iBuyer purchases last year, according to a report by Redfin. The report measured purchases made by Bungalo, Opendoor, Offerpad, RedfinNow and Zillow.
“It’s no surprise Raleigh and Phoenix led the nation in iBuyer share because those housing markets are iBuyer sweet spots and are poised for price growth in 2020,” said Redfin Chief Economist Daryl Fairweather. “These markets work well for iBuyers which tend to purchase homes that are relatively affordable, were built within the last few decades and are easy to price accurately because they are located in tract neighborhoods with largely homogenous housing stock.”
According to Redfin, the nation’s top iBuyers purchased one out of every 100 homes that sold in 2019 across the more than 200 U.S. metro areas the company tracks. This nearly doubled the respective 2018 market share of 0.6%.
Although iBuying accounted for only 3% of home sales last year, iBuyers purchased 7.3% of the homes that were sold in Raleigh in 2019, a jump from 3.9% in 2018. Phoenix trailed behind at 5.9%, followed by Charlotte, North Carolina and Atlanta, which both had 5.2% share. Las Vegas was last at 4.1%.
Fairweather said that Redfin forecasts indicate that both Phoenix and Raleigh will have strong price growth in 2020.
“It’s a seller’s market right now, but this can be a double-edged sword for sellers who also are looking to buy. iBuyers are a big help for folks who need the equity from their current home to buy the next, and want the flexibility of lining up their sale with the purchase of their new home,” Fairweather said.
“Homeowners who may have been reluctant to sell because they were concerned about carrying two mortgages or worried about the stress of choreographing two transactions may be persuaded by the convenience of an iBuyer sale.”
Raleigh also had the highest year-over-year growth, up 3.4 percentage points. Houston followed, with market share up 0.1% in 2018 and 3% in 2019. Orlando was the only metro area where share fell from 2018 to 2019, declining from 2.6% to 2.2%.
In 21 markets, iBuyers had a market share of at least 1%, the report said. In 11 markets, there was a share of 3% or more.
Surprisingly, iBuyers also bought homes on the expensive side, too. Across the top 21 markets, homes that were purchased were a median price of $269,000, which was a 3% increase from 2018, but still below the national median of $306,000 in January.
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