‘Hungry’ Investors Turn to iBuyers for More Inventory

December 4, 2018

Single-family rental giants, such as Invitation Homes and American Homes 4 Rent, are in search of more homes to buy, and they’re increasingly turning to iBuyers to find inventory. iBuyers, like Opendoor, Offerpad, and Knock, are tech companies that buy homes from sellers with instant cash offers and then put the homes back on the market.

Single-family rental companies purchasing homes from iBuyers increased from 3.9 percent of total iBuyer sales in 2016 to 9.6 percent so far in 2018, according to data from ATTOM Data Solutions, a real estate data firm.

Single-family rental companies purchased tens of thousands of homes during the housing crisis, mostly at bargain prices in foreclosure. Then, they rented out the homes to take advantage of a hot rental market. But as the housing market recovered, these companies are struggling to find more bargain-priced homes to add to their inventories.

“It’s not exactly a perfect marriage, but it may be becoming a better fit because [single-family rental] operators are more hungry for inventory, and demand may be weakening somewhat from owner-occupants as mortgage rates rise,” says Daren Blomquist, ATTOM’s senior vice president.

“For iBuyers, SFR companies could be a security blanket as the housing shifts from a seller’s market to a neutral market,” Curbed.com reports. “iBuyers claim the vast majority of their revenue comes from a transaction fee, not from house prices that appreciate between the time they buy the house, renovate it, and sell it.” But Curbed.com notes that the iBuyer model, which debuted in 2014, has yet to be tested in a housing market where home prices are holding steady or falling.