Pulling Back the Curtain: The Analytics Behind The Failing iBuyer Business Model
A data-driven analysis of the impact of recent housing market changes on the iBuyer business model
Some companies mentioned in this post are publicly traded. This analysis is not investment advice, is not nationally comprehensive, and may contain errors in the source data or analysis. This analysis is our perspective based on localized available data and may not be current or up-to-date.
We researched and wrote a couple months back about the iBuyer business model (companies that buy and sell homes in short periods of time, like Opendoor). The long story short was — we concluded the economics were fragile in the strongest housing market in history, and something had to give to achieve a long-term sustainable business model.
Since we wrote, interest rates have rapidly risen and the housing market has dramatically slowed. In the face of this, the iBuyer business model is quickly deteriorating. In early November, Opendoor reduced its workforce by nearly 20%, and this was after other rounds of earlier cuts. Shortly after, Redfin announced the closure of its own iBuyer business with a commensurate reduction in workforce.
