A report by Redfin found that iBuyers purchased 3.1% of homes during Q3 2019 across 18 markets—up 1.6% from the prior years.
Raleigh, North Carolina was home to the largest share of iBuyers purchases at 6.8%, followed by Phoenix (5.1%); Atlanta, Georgia (4.4%); and Charlotte, North Carolina (4.3%).
iBuyers is short for instant buyers, which is used to describe real estate companies such as Opendoor and RedfinNow that use technology to make quicker offers to sellers and purchase homes in quick, cash transactions.
“iBuyers are concentrating their efforts in southern markets where both home sales and prices are poised for strong growth,” said Redfin Chief Economist Daryl Fairweather. “We think that iBuyers are likely to accelerate home sales in these markets. Homeowners who may have been reluctant to sell because they didn’t want to deal with the hassle may be persuaded by the convenience of an iBuyer sale.”
The share of iBuyers just a few years ago were virtually non-existent. iBuyers made up less than 1% of all home sales from 2015-2017. Sales broke 1% in Q1 2018, hitting 1.6% in Q3 2018.
Markets that are most successful for iBuyers are those with homes priced below the national median of October’s $313,200
“Focusing on these more affordable homes allows iBuyers to purchase more homes with the same amount of money. Affordable homes also tend to sell more quickly than more expensive homes, which allows iBuyers to move through their housing inventory and buy additional homes more quickly, refining their process with every home they sell,” Redfin said.
Houston, Texas, had the largest increase in the share of iBuyers, rising to 3.8% in Q3 2019 from 0.1% a year ago. Jacksonville, Florida, saw the second-largest increase going from having no share of the iBuyer market to 3%.
iBuyers sold homes for less than the local average in all but two markets—Riverside California; and Dallas. Austin, Texas, was home to the largest price gap, with the average home sold by iBuyers was 27% below the $320,000 local average.