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iBuying is Taking Off in These 8 Markets


[Updated: Jan 29, 2020] Jan 13, 2020 by Liz Brumer
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Redfin recently released a report revealing the top markets where iBuying, a new quick, hassle-free way to sell a home, is rapidly growing. Currently, the largest iBuying companies like Offerpad, Zillow (NASDAQ: Z), Redfin (NASDAQ: RDFN), and Opendoor offer their instant buying services in 20 metro areas. Of the most active 18 markets, three metro areas and eight neighborhoods had 10% or more of their market share being purchased or sold by iBuyers.

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.

The top 8 neighborhoods for iBuying market share

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

Source: Redfin

Top 3 cities where iBuying is growing

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, AZ Phoenix, AZ 11.8% 1.7% $234,900 $238,000 $281,250
3 San Tan Valley, AZ Phoenix, AZ 10.6% 9.9% $228,425 $246,995 $281,250

Source: Redfin

Top 10 markets where iBuying is most active

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 Median Price of Homes Sold by iBuyers, Q3 2018 Metro-Wide Median Home Sale Price, Q3 2019
Raleigh, NC 6.8% 3.8% $235,000 $252,500 $291,000
Phoenix, AZ 5.1% 4.9% $250,000 $250,000 $281,250
Atlanta, GA 4.4% 2.1% $200,000 $222,000 $250,000
Charlotte, NC 4.3% 2.5% $207,550 $235,000 $264,300
Houston, TX 3.9% 0.1% $208,000 $224,500 $248,864
San Antonio, TX 3.6% 2.5% $184,750 $205,000 $235,000
Dallas, TX 3.6% 2.5% $231,250 $235,800 $223,700
Las Vegas, NV 3.3% 3.4% $285,000 $289,000 $288,000
Jacksonville, FL 3.0% 0.0% $199,000 N/A $240,000
Austin, TX 2.7% 0.0% $235,000 N/A $320,000

Source: Redfin

The top markets, neighborhoods, and cities where iBuying is the most active are primarily in the South, in areas where the median home price is less than the national average of $313,200 as of October 2019. Their ideal position among the top markets has been purchasing two-story homes built in the '90s and 2000s, although their model may shift as they continue to expand. Homes being sold by iBuyers were on the market for an average of 28 days, which is a huge improvement from the prior year's average of 74 days on the market.

iBuying is still a relatively new method for buying and selling homes, and iBuying companies are constantly refining and improving their processes to make their model more effective. 2020 is expected to bring further expansion to expensive coastal markets. As buyer confidence in the iBuying model grows, it's likely market share sales from iBuying will only continue to grow as well.

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Liz Brumer-Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zillow Group (C shares). The Motley Fool recommends Redfin. The Motley Fool has a disclosure policy.