SEATTLE, Dec. 11, 2019 /PRNewswire/ -- (NASDAQ: RDFN) — iBuyers purchased 3.1% of the homes sold during the third quarter of 2019 across 18 markets, up from 1.6% a year earlier, according to a new analysis from Redfin (www.redfin.com), the tech-powered real estate brokerage. The markets where iBuyers had the largest market share were Raleigh (6.8%), Phoenix (5.1%), Atlanta (4.4%) and Charlotte (4.3%). The term "iBuyer" (short for instant buyer) is used to describe real estate companies, such as RedfinNow, that use technology to make quick cash offers and purchase homes directly from homeowners. They then quickly update and resell the homes.

The Redfin analysis, the first in what will be a quarterly report on iBuyer activity, looked at home sales in the third quarter across 18 metro areas where iBuyer purchases accounted for at least 1% of the market. Redfin analyzed public records on the home purchases and sales of the four largest iBuyers: Opendoor, Zillow, Offerpad and RedfinNow. 

Raleigh unseated Phoenix—birthplace of the iBuyer movement—as the biggest market for iBuyers in the second and third quarters. The share of homes purchased by iBuyers increased the most in Houston, where iBuyers bought 3.8% of the homes in the third quarter of 2019, up from just 0.1% a year prior. Jacksonville saw the second-largest increase, up to 3.0% from 0%. The third-largest jump was in Raleigh, where iBuyer market share rose to 6.8% up from 3.8%.

"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 markets where iBuyers are currently doing the most business are those where the typical home is priced at or below the national median ($313,200 in October). Affordable homes 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.

The median price of homes sold by iBuyers fell in 17 of 18 markets in the third quarter compared to a year earlier, despite the overall price of homes increasing in every market. Phoenix was the only market where the median iBuyer sale price was unchanged.

Market Share and Median Sale Price in Areas Where iBuyers Have at Least 1% Share

Homes sold by iBuyers in the third quarter stayed on the market for a median of 28 days, down from 74 days a year prior. This large decline is likely due to the iBuyers improving their processes and becoming better at pricing homes to sell. Redfin has not seen a similar decline in days on market in the market as a whole. Homes sold by iBuyers spent less time on market than the typical home in 13 of the 18 metros.

The three metro areas with the largest difference in days on market were Raleigh (33 days faster), Charlotte (33 days) and Nashville (30 days). The outliers where iBuyer homes took longer to sell were Portland, OR—where iBuyer homes spent 13 more days on the market than the median for the metro—Sacramento (11 days), Minneapolis (6 days), Denver (5 days) and Austin (3 days).

The buying and selling activity of iBuyers can be difficult to assess because each company purchases a home as an entity (such as a corporation, partnership or LLC) and each iBuyer can have multiple purchasing entities of different names. The analysis identifies these entities to the extent possible, but there may have been iBuyer purchases in the quarter that Redfin was not able to connect to an iBuyer.

To read the full report complete with local market data, charts and full methodology, visit: https://www.redfin.com/blog/ibuyer-real-estate-q3-2019

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry's lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $85 billion.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, subscribe here. To view Redfin's press center, click here.

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SOURCE Redfin