PHOENIX, AZ (3TV/CBS 5) — A Phoenix-area realtor reports that iBuyers own nearly 13% of all listings in Maricopa County, making it much more difficult and expensive for first-time homebuyers. The reach of tech corporations can be felt at a gated community near Thomas Road and 32nd Street, where an iBuyer purchased a house for $600,000, $100,000 more than neighboring homes.
Valley real estate agent Greg Corbett said the indirect market manipulation is contributing to an expensive and tough search for local homebuyers. "It's bad for any buyer who's trying to compete with them," said Corbett. Corbett has been analyzing iBuyers' activity in Arizona. He said the businesses who once helped sellers for a price are now spending millions to have their place in an emerging market.
"They're playing the market as if it's a game. They intend on winning," said Matthew Aguilar. It's a game that Aguilar feels is fixed against him and many others in his situation who are paying $1,700 in rent for his multi-generational home and can't get a mortgage for the rising costs of homes in Maricopa County. "I really don't have a choice under the current system unless I see a large influx of cash," said Aguilar. "Then I won't be able to purchase a home."
According to The Cromford Report, the average home sales price in September 2020 was $408,240. A year later, it's $494,502.
It's a difficult reality for many Arizonans who feel priced out of their own communities. Aguilar hopes local governments recognize the need for affordable housing. Meanwhile, Corbett suggests you wait until the market cools down before you buy. "Don't chase anything right now. If things look like you're paying too much for it, then I'd probably hold off," said Corbett.
A spokesperson for Zillow disagrees with Corbett's analysis on iBuyers grip on the housing market. They sent Arizona's Family the following statement:
"Zillow’s home buying and selling program, Zillow Offers, is an iBuying or instant buying business, which empowers movers and limits the stress involved in a traditional home-selling process. We pay market value for every home we purchase and list the homes back on the market quickly at market value. When we looked at homes that sold traditionally after they declined a Zillow Offer, we learned that on average, those selling traditionally sold for only .09% more than the Zillow Offer. And on every home that Zillow buys and sells, we are transparent: the purchase and re-sale prices are publicly displayed on the property page on Zillow.com. With Zillow Offers, our goal is to buy at market rate, then sell quickly at market rate. The business model is designed to generate our profit margins from the convenience fees we charge sellers — typically around 5% today.
Additionally, iBuying is designed to add net-new inventory to the market by unsticking homeowners who would otherwise be put off by the traditional pain points of selling a home or timing their next purchase. In Q2, over 80% of homes sold to one of the four largest iBuyers, were never initially listed for sale on the open market."