Eight neighborhoods—in Phoenix, Charlotte, Fort Worth, and Raleigh—had iBuyer purchase rates of 10% or more through October of 2019. iBuyers purchased 13.7% of the homes sold so far in 2019 in the Phoenix neighborhood of Pecan Creek, making it the most active neighborhood in the country for iBuyers this year.
If you’re unfamiliar with iBuying, homeowners in participating markets can request an online offer for their home. iBuyers use an algorithm to determine a cash purchase price for the property, giving the homeowner an instant offer. iBuying closes quickly, in as little as a few weeks, and properties are typically purchased sight unseen.
In addition to eight neighborhoods, there were three cities or towns where iBuyers purchased over 10% of the homes in the third quarter: two in the Phoenix area—Tolleson, AZ (11.8%) and San Tan Valley, AZ (10.6%)—and the town of Knightdale, NC, near Raleigh. iBuyers purchased 14.8% of the homes sold in Knightdale in the third quarter, more than any other city or neighborhood in the nation.
Most of the neighborhoods, cities and towns where iBuyers have been purchasing the largest share of homes are more affordable than their respective metro areas. So far iBuyers are seeing the most success when they focus on homes that fall within the relatively tight price range of $200,000 to $300,000. This means that many of their purchases have been clustered in the lower-priced regions within a given market. However, their focus on this price range may change for iBuyers in 2020 as they begin expanding into expensive coastal markets. RedfinNow is already operating in higher priced markets like Los Angeles, Orange County and San Diego. Zillow has recently announced that they have expanded Los Angeles, and Opendoor has indicated that they’ll be there soon, too.
“The fact that iBuyers have reached over 10% market share in some places could be an indication of how big iBuying could get nationwide once the business model is perfected,” said Redfin chief economist Daryl Fairweather. “As iBuyers begin to expand in more expensive markets beyond the small foothold they currently have, we’ll get a clearer picture of whether they are capable of reaching a high level of market share nationwide.”