iBuyer companies and institutional investors are saturating the real estate market. A recent study by Bloomberg News of over 100,000 property records revealed that three large iBuyer companies sold starter homes to landlords. The now-defunct Zillow Offers, along with Offerpad Solutions and OpenDoor Technologies, sold thousands of properties to landlords backed by firms like Blackstone, Cerberus Capital Management, and KKR.
Impact on First-Time Homebuyers
One in five homes were sold to institutional investors – and twice that in some Sun Belt cities, making the market extremely difficult for first-time homebuyers. And 20% of homes flipped by iBuyers in 2021 were purchased by investors and other entities.
In the third quarter of 2021, the three largest iBuyers gobbled up more than 27,000 homes – almost twice as many as the previous quarter. Those iBuyers also owned more than $10 billion worth of real estate by the end of the third quarter. Before Zillow terminated its iBuying division, it had marketed thousands of homes to institutional landlords. This helped spell the beginning of the end for Zillow Offers.
iBuying Effects on Tampa Bay
This trend has also affected the real estate market locally. “Homes available for sale in Tampa Bay remain in short supply,” said John Tomlin, CEO of Tomlin St Cyr. “In addition to continued migration to this amazing region, institutional investors are also gobbling up homes for investment purposes as rents continue to climb by double digits.”
The iBuying model has faced many challenges. This includes pricing algorithms not optimized for the current market, extended turnaround times, and supply chain issues causing delayed repair and remodel times.
How TSC Can Assist
Tomlin St Cyr Real Estate Services (TSC) can help you navigate the current real estate market. With several brokers and decades of local real estate experience on our team, we’ll help you navigate every aspect of buying or selling a home. Get your complimentary evaluation to see how much your home is worth, or contact us today to learn more!