Today’s discussion is about two related housing trends emerging in the residential market that we expect to have an impact on supply and demand in the coming months—and that buyers and sellers both should pay close attention to. Inventory levels currently remain very low and demand is still strong, but as the COVID-19 situation evolves, both elements will be in flux. So, what are the two trends, and how might they affect the market?
Trend 1: Decreasing iBuyer Activity
First are the so-called iBuyers. In recent years, companies such as OpenDoor, Zillow, Redfin, and Phoenix-based Offerpad have been a major player in the under-$400,000 segment of the residential housing market. Offering the promise of easy, “one-button” home sales, the appeal was clear for a certain demographic of sellers who did not want to take the traditional real estate route—even if it meant lower sales prices and higher service fees.
The market, however, became significantly more challenging for these players this spring. In March, Opendoor and Redfin suspended their iBuying operations, and in mid-April, Opendoor announced that it was laying off 35% of its staff. With iBuyers diminishing their activity, the inventory in this segment is building.
Since that time, some of the ibuyers are returning to various markets, including the Greater Phoenix Area.
Trend 2: Increasing Inventory from Airbnb and Single-Family Short-Term Rentals
The second trend is a bit more difficult to measure. MLS statistics do not specifically identify and track how many Airbnb and similar single-family short-term rentals are coming to market. It is clear, however, from sheer listing volume (particularly of fully furnished homes) that it is indeed happening at scale. An AZ Central article on May 2 calculated a 40% reduction in short-term rentals in the Phoenix area as tourism became essentially nonexistent. While some owners have chosen to convert to long-term rentals, there are indications that many others are cutting their losses and selling.
For owner-occupant buyers, this change in the market represents potential opportunities. Since these short-term rentals needed to be kept in good condition, it may be a chance to pick up a move-in-ready property that has already been renovated to a certain extent. (For tips on purchasing in the current market, see our recent blog, What to Expect When You Are Buying a Home in the Coronavirus Age.)
For sellers, adding these two housing trends together represent a rare gift: The chance to list properties before a significant amount of inventory hits the market—and before the lifting of foreclosure restrictions and the likelihood of bank-owned and distressed properties emerging, as well. Strategically priced homes are selling fast and the buyers are serious, as we noted in Should I Sell My House Now, to Get Ahead of the Market?
Whether you are buying or selling, R.O.I. Properties can help you navigate the challenges presented by today’s fast-changing market. Please contact us at 602-319-1326.