IBuyer Watch

02/25/2023

A key measure of inflation increased more than expected in January.

The core PCE price index was expected to increase 0.5% from a month ago and 4.4% on an annual basis, according to Dow Jones.

02/07/2023

Even as IBuyers like Opendoor pull back, Mark Spain Real Estate continues to advertise across the Southeast promising a “guaranteed cash offer” on your home.

During 2020-2022, Mark Spain served primarily as a front for investors and iBuyrs like Opendoor but has returned to its roots of pushing to sign as listing agent before presenting low-ball investment offers.

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12/13/2022

“Inflation was still up 7.1% year-over-year in November, though down from October’s rate of 7.7%. High housing costs, also up 7.1% from last November, overwhelmingly contributed to that continued elevation.

…Costs for shelter — which includes rent, owner’s equivalent to rent and lodging outside the home — rose 0.6% from October which saw the fastest month-over-month rate since August 1990.“

Consumer prices rose by 7.1% in November compared to last year, and housing costs remain uncomfortably high.

11/22/2022

Housing market cooling has forced iBuyers like Redfin and Opendoor to lay off hundreds and change their business models.

Meanwhile, home builders like Lennar are offering thousands of new Sun Belt homes to private equity investors while single-family rental companies are hoping to take advantage as prices drop.

Investor home purchases dropped just over 30% in the third quarter of this year compared with the same period last year, according to Redfin.

11/17/2022

11/09/2022

Redfin is winding down its iBuying operation and laying off hundreds as home flipping has become an increasingly risky and money-losing proposition.

Opendoor went through its own round of massive layoffs after reporting Q3 losses. It will not be leaving iBuying entirely, but is going to attempt a pivot to a model that still dodges MLS listings by directly connecting sellers with cash offers, private buyers, and investors for a fee.

Time will tell how inflated housing markets previously dominated by iBuyers like Raleigh, Charlotte, Phoenix and Atlanta will fare as investors back away.

Redfin is set to shutter its home-flipping business and reduce its workforce by 13%, laying off 862 employees.

11/09/2022

Redfin Cuts 13% of Staff, Shuts Down Home-Flipping Business

The company’s workforce has shrunk by 27% since the end of April as a slowdown grips the US housing market.

11/07/2022

After selling thousands of homes at a loss and laying off 18% of the company(~550 employees), Opendoor’s CEO says they will change their model from flipping all the homes themselves to operating a marketplace where sellers can be connected directly to (more conservative) Opendoor offers, private buyers, and institutional investors for a fee.

Rapidly buying and flipping homes for immediate profit only worked in a frenzied low-rate environment like 2020-2021 so we’ll see if Opendoor can re-invent itself by digitizing essentially the same model as Mark Spain’s Guaranteed Cash Offers (connecting sellers to institutional investors and iBuyers for a fee).

In the meantime, their new model aims to further reduce the relevance of MLS and cut traditional agents out of the process entirely.

Do you think this model will be any better for the housing market than the iBuyer approach?

Company starts a new buying-and-selling service in a bid for growth in a volatile economy.

11/03/2022

Opendoor reported deep losses for Q3 after layoffs yesterday. The CEO also announced a shift in their strategy to becoming a marketplace to replace traditional MLS listings and agents by connecting sellers directly to Opendoor offers, other buyers and institutional investors. Opendoor Writes Down Home Inventory by $573 Million in Slump

Opendoor Technologies Inc. reported third-quarter losses that were steeper than expected, after the US housing slump led the company to sell homes for less than anticipated and pushed it to write down the value of its inventory.

11/02/2022

Opendoor Lays Off 18% of Workers in Wave of Housing Cutbacks

Chief Executive Officer Eric Wu announces job cuts amid ‘one of the most challenging real estate markets in 40 years.’

10/26/2022

Zillow has laid off 300 employees in areas like it’s Premier Agent program to focus on its housing super app concept, which includes direct integration to Opendoor for cash offers.

Zillow Group Inc. laid off 300 employees as the company contends with a slowing housing market.

10/24/2022

The slowdown seen in the cheap money and single family rental-powered housing market has started to impact apartment rentals as well. Previously booming markets like Phoenix, Atlanta and Las Vegas are seeing dramatic slowdowns in rent growth as tenants reach their limits and choose alternatives like living with family to ride out the inflationary wave.

Where will this leave all the luxury apartment projects coming online next year that were relying on COVID-level rent growth? Are we headed to giving more bailouts to the very investors that drove record inflation?

Affordability pressures and inflation are holding back tenants, forcing landlords to ease off big increases.