(NASDAQ: RDFN) -- iBuyers have purchased more than 10% of homes sold so far this year in a handful of neighborhoods, cities and towns, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. The hotspots are mostly clustered in North Carolina and Arizona.
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.
"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. "However, it's possible that iBuyers are only doing so well in certain neighborhoods because the homes there are largely homogenous--modest, entry-level homes all built around the same time, typically with two or three bedrooms. These factors make it easier to use automated tools to value homes well and resell them quickly. 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."
Top 10 Neighborhoods for iBuyer Market Share in 2019 Through October
Rank Neighborhood City / Town Share of Home Sales Purchased by iBuyers, 2019 Share of Home Sales Purchased by iBuyers, 2018 Median Price of Homes Sold by iBuyers, 2019 Neighborhood Median Home Sale Price, 2019 Metro-Wide Median Home Sale Price, 2019 1 Pecan Creek San Tan Valley, AZ 13.7% 10.4% $229,923 $245,900 $278,000 2 Waddell Glendale, AZ 11.7% 16.9% $281,000 $294,750 $278,000 3 Newell Charlotte, NC 11.4% 4.4% $206,950 $212,500 $258,612 4 Highland Creek Charlotte, NC 11.3% 4.1% $242,000 $269,250 $258,612 5 Back Creek Church Road Charlotte, NC 10.8% 5.3% $220,000 $225,500 $258,612 6 Sendera Ranch Fort Worth, TX 10.8% 8.4% $215,000 $229,000 $215,500 7 Forestville Raleigh, NC 10.6% 6.4% $239,500 $239,000 $290,542 8 Laveen Phoenix, AZ 10.3% 10.7% $240,900 $251,750 $278,000 9 Davis Lake-Eastfield Charlotte, NC 9.4% 5.1% $232,000 $235,000 $258,612 10 Surprise Farms Surprise, AZ 9% 11.4% $252,850 $265,000 $278,000
"A lot of what's driving home sellers to accept offers from iBuyers in the Phoenix area is the ability it gives them to move up to another home quickly," explained Phoenix Redfin agent Kelly Khalil. "A move-up buyer who wants to make a strong offer on a mid-range home in the $300,000 to $350,000 range can sell their entry-level house quickly to an iBuyer. Then they don't have to make an offer with contingencies. We're seeing this in a lot in affordable areas like San Tan Valley that are a little farther away from Phoenix proper."
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.
Top 10 Cities and Towns for iBuyer Market Share in Q3 2019
Rank City Metro Area Share of Home Sales Purchased by iBuyers, Q3 2019 Share of Home Sales Purchased by iBuyers, Q3 2018 Median Price of Homes Sold by iBuyers, Q3 2019 City Median Home Sale Price, Q3 2019 Metro-Wide Median Home Sale Price, Q3 2019 1 Knightdale, NC Raleigh, NC 14.8% 6.1% $200,000 $245,000 $291,000 2 Tolleson, Phoenix, AZ 11.8% 1.7% $234,900 $238,000 $281,250 AZ 3 San Tan Valley, AZ Phoenix, AZ 10.6% 9.9% $228,425 $246,995 $281,250 4 Converse, TX San Antonio, TX 9.5% 5.6% $169,000 $196,750 $235,000 5 Mableton, GA Atlanta, GA 9% 3.5% $300,000 $245,000 $250,000 6 Clayton, NC Raleigh, NC 9% 6.7% $206,750 $247,699 $291,000 7 Little Elm, TX Dallas, TX 8.9% 9.1% $232,500 $285,000 $223,700 8 Casa Grande, AZ Phoenix, AZ 8.5% 2.5% $202,000 $205,000 $281,250 9 Stockbridge, GA Atlanta, GA 8% 3% $183,500 $185,000 $250,000 10 Maricopa, AZ Phoenix, AZ 7.9% 4.4% $213,000 $222,000 $281,250
"iBuyers in Raleigh have been primarily focused on suburban homes priced between $200,000 and $300,000," said Raleigh Redfin agent Mark Stephens. "The iBuyers definitely have a 'type'--most of the homes they're buying are standard two-story homes that were built in the '90s and early '00s. Their uniform nature makes these homes easy to turn around quickly with minor exterior work plus some carpet and paint inside."
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.
To read the full report, including methodology, please visit: https://www.redfin.com/blog/what-neighborhoods-are-ibuyers-in.
About RedfinRedfin (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, email email@example.com. To view Redfin's press center, click here.
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