'IBuyers purchased 70,402 homes in 2021, more than double the previous annual high of 32,726 homes in 2019,' according to Zillow's Q4 iBuyer report.
iBuyers sold homes they bought for a median mark-up of 1.1 percent in the fourth quarter, according to the Zillow report. That's the second-lowest margin on record, down from 8.6 percent in the first three months of 2021.
Companies operating as instant buyers picked up more than 70,000 homes last year, setting a new high water mark for the industry. A new report from Zillow looking at the final figures from 2021 found that iBuyers more than doubled their previous annual high for homes purchased in the 38 largest markets and also sold more homes.
However, iBuyers continue to struggle to show profitability at a scale where they're valuating, buying, repairing and selling thousands of homes across the country. The data also included homes bought and sold by Zillow Offers, which was famously shuttered in the fourth quarter after it failed to correctly valuate and sell homes for enough profit. (The segment lost the company $342 million in the fourth quarter of 2021.)
Opendoor, the largest of the major iBuying companies, bought 9,639 homes in the fourth quarter and sold 9,794. Both were major increases for the company, and it ended the year with 17,009 homes on hand. In the same timeframe, its losses grew. It lost $191 million, more than triple the $54 million the company lost during the final three months of 2020. Opendoor lost $662 million in total for 2021.
The companies operating in their 38 largest markets picked up 1.9 percent of homes sold in the third quarter of last year, a record high. But as their market share grew, so did the time it took to get rid of the homes. Hold times for iBuyers rose to 98 days in the fourth quarter, up from 63 days in the middle of the year. To flippers, the time spent holding onto a house is a significant operational cost that has implications for profitability. Investors pay utilities, property taxes, financing (if needed) and other costs while they still own the home.