While the housing market has come roaring back in the pandemic, iBuying activity hasn’t. Volumes and market share of iBuying activity is likely to finish 2020 at 50% less that of 2019, according to real estate tech strategist Mike DelPrete, who studies iBuying activity in real estate.
Meanwhile, traditional home sales for existing homes and new homes has been running above last year’s levels.
iBuyers make instant cash offers to sellers who wish to bypass the traditional MLS marketing route, often for assurance of a quicker sale. However, homeowners tend to pay higher fees for the convenience.
DelPrete’s report notes that all the major iBuyers—Opendoor, Zillow, Offerpad, and Redfin—have seen a significant drop in 2020’s overall transactions compared with 2019. Opendoor, the nation’s largest iBuyer, has seen the largest drop since the pandemic, with total transactions for the year down 59% compared to 2019.
Activity is down because many iBuyers paused operations as the COVID-19 pandemic first struck the U.S. this spring. Opendoor’s October home purchases are down more than 70% compared to a year ago, DelPrete’s report notes.
Opendoor continues to hold the largest market share in the iBuying business, however. DelPrete reports that in 2020 Opendoor’s market share has been 50%, followed by 26% from Zillow, 23% from Offerpad, and 1% from Redfin.
“The drop in iBuyer market share and transaction volumes isn’t a failure of the model, but it is a result of the model,” DelPrete notes within the report. “The iBuyers face a slow climb back to the levels of 2019, as they conservatively ramp up operations in a new, uncertain housing market.”