iBuyer Activity Plummets in the Second Quarter Due to COVID-19

September 15, 2020

The COVID-19 health pandemic resulted in iBuyers purchasing the fewest homes in more than three years during the second quarter, according to Redfin.

The online brokerage company reported that the nation’s top iBuyers bought 880 homes in the second quarter, or 0.1 percent of homes that sold across the 418 U.S. metros tracked by Redfin, as they slowly reopened after suspending business at the beginning of the coronavirus pandemic. That’s down 88 percent from 7,410 homes, or 0.6 percent market share, a year earlier and represents the smallest number of properties purchased by iBuyers since the first quarter of 2017. In dollar terms, iBuyers spent just $195 million buying homes, compared with $1.6 billion a year earlier.

Real estate firms including Redfin, Zillow and Opendoor announced in March that they were pausing iBuying as the coronavirus began to take a toll on the economy. In May and June, with housing demand rebounding, they started to reopen their iBuying programs in select markets. While iBuyer market data isn’t yet available for July and August, Jason Aleem, vice president of RedfinNow, said he has seen a major uptick in demand over the last few months.

“The pandemic has brought a lot of folks into the market who need liquidity, certainty and a safe and contactless way to sell their home,” Aleem said. “We’re working with several move-up buyers who need a bigger house with room to work from home, as well as parents moving closer to their adult children.

“One trend that has ramped up since the pandemic began is the iBuyer bidding war,” Aleem continued. “Homeowners are seeking out offers from multiple iBuyers so they can feel confident they are getting the best possible price in this blazing hot market without a bunch of foot traffic coming through. As a result, iBuyers are making more competitive offers.”

In the second quarter—before iBuying activity had substantially picked back up—all of the 14 U.S. metro areas where iBuyers purchased at least 20 homes experienced a decline in market share from a year earlier. Phoenix saw the most significant slump, with iBuyers acquiring 0.8 percent of homes that sold there, down 3.3 percentage points from the second quarter of 2019. Raleigh and Las Vegas saw the second and third biggest drops, falling 2.9 and 2.7 percentage points, respectively. They were followed by Fort Worth and Charlotte, Redfin reported.

Contact ALTA at 202-296-3671 or communications@alta.org.

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