iBuyers have been expanding at incredible speeds. What started as a moonshot idea six years ago has now blossomed into a massive, billion-dollar homebuying market in its own right — and it’s not showing any signs of slowing. Regionally, the South has the most iBuyer action, with Phoenix essentially the epicenter of it all. Two of the big players launched there (Opendoor and Offerpad). Zillow’s Instant Offers also now operates in the city. What does this mean for mom and pop shops? Keep reading to learn more.
Opendoor brought the idea to life in 2014, followed by competitor Offerpad. Since then, countless others have hit the scene — including Redfin (via RedfinNow) and Zillow (via Instant Offers) and even brokerage- and market-specific ones like Door and Offerdepot.
But it’s not just more players that are getting in on the game. There’s also a footprint expansion happening, too. And though most of the major iBuyers got their start in the Phoenix area, this new-age home selling option has reached far beyond the borders of Arizona’s biggest city.
By the looks of it, that reach is going even further as we head into 2019.
The below infographic helps to tell the story in a bit more detail:
Where iBuyers Operate
Regionally, the South has the most iBuyer action, with Phoenix essentially the epicenter of it all. Two of the big players launched there (Opendoor and Offerpad). Zillow’s Instant Offers also now operates in the city.
Texas also has a big iBuyer presence. Dallas-Fort Worth, Austin, Houston and San Antonio all have at least one iBuyer in each of those markets, and a few players have plans to expand further into the Lone Star State later this year.
North Carolina (specifically Raleigh and Charlotte), as well as Florida, California and Georgia also have decent iBuying activity as well. Atlanta is one of the few cities to have most of the big players in the market. Opendoor, Offerpad and Zillow are all on the ground in ATL.
For the most part, iBuyers are shying away from markets in the North and Northeast parts of the country. Housing affordability (and availability) likely plays a role in this, as does overall consistency of existing housing stock. iBuyers rely heavily on data and algorithms when evaluating potential properties. Areas with inconsistent and highly unique housing makes this approach less reliable (and less profitable).
Where iBuyers are Headed
For the most part, iBuying is going to be much of the same this year: more Southern and suburban markets with largely affordable housing inventory. Offerpad just expanded into Houston at the start of the year, and more recently also announced launching in San Antonio and Austin (Opendoor is currently operating in those cities as well).
Opendoor has also recently expanded their presence in Southern California to buying and selling homes in the Los Angeles market. They’ve been operating in the nearby Inland Empire region of Riverside-San Bernardino since 2018.
With the number of investments being made into this iBuyer movement (not to mention the institutional interest in it), we can likely expect some serious growth on the horizon.
Offerpad is currently available in more than 700 cities across the country. “We’re excited to soon share more options for consumers to help them buy and sell the best way possible,” said Cortney Read, director of communications & outreach.
Where will this money take them, though? Only time will tell.
The iBuyer Market Reach
In many of the markets where iBuyers are present, we are seeing home prices reach their peaks in 2018. For instance, the Atlanta market, where Opendoor, Offerpad and Zillow are currently present, prices of homes for sale have increased 62 percent in 5 years and reached their peak in 2018.
Other markets to reach their peak in 2018, where iBuyers are present include: Charlotte, Dallas-Fort Worth, Denver and Houston.
Those markets, where the iBuyer footprint is casting a wider net with the presence of Opendoor, Offerpad and Zillow include; Las Vegas, Raleigh, and Phoenix, all of which have seen double digit increases in home prices.
Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors
2400 E. Arizona Biltmore Circle
Phoenix, AZ 85016