Growing Real Estate 'iBuyer' Companies Raise Concerns

The troubling trend of buying and selling homes as an investment has some critics worried that it will contribute to an already overheated housing market.

2 minute read

November 2, 2021, 8:00 AM PDT

By Diana Ionescu @aworkoffiction

Suburban Home

Pexels / Pixabay

Jerusalem Demsas reports on "a growing fear that housing is becoming less like shelter and more like a risky financial asset traded on Wall Street." A trend dubbed 'iBuying' is being blamed for manipulating the housing market, which already saw major upheavals and a "historic undersupply" during the pandemic, writes Demsas.

Zillow began flipping homes in 2018, hoping its algorithm-based approach would be a profitable way to buy and sell homes. Now, writes Demsas, it has announced that "it would stop buying homes for the rest of the year, self-reportedly due to a 'backlog of renovations and operational capacity constraints' that it blamed on the supply chain issues plaguing the economy."

Demsas writes that while concerns that these companies will drive up home prices might be unfounded, the rise of institutional real estate investors could have an impact on regular buyers and renters. 

iBuyer companies make up a very small share of the market — roughly 1 percent of home sales in the second quarter of 2021, at what is their peak so far — but it’s important to take concerns about their growth seriously. While iBuyers contend that they are offering a clear solution to reducing the stress of the home-selling process, US policy has predicated financial security on homeownership, and the introduction of large firms into the space raises fears of potential anti-competitive and predatory behavior.

Planetizen has previously covered the wild ride of the housing market during the pandemic as prices skyrocketed and low- and middle-income households are increasingly pushed out of most major cities. 

Monday, November 1, 2021 in Vox

View down New York City alleyway at nighttime

Red Cities, Blue Cities, and Crime

Homicides rose across the nation in 2020 and 2021. But did they rise equally in all cities, or was the situation worse in some than in others?

March 12, 2023 - Michael Lewyn

babyt Boomer Homeowners

The Shifting Boomer Bulge: More Bad News for America’s Housing Crisis?

In the first of a two-part series, PlaceMakers’ Ben Brown interviews housing guru Arthur C. Nelson on the sweeping demographic changes complicating the housing market.

March 12, 2023 - PlaceShakers and NewsMakers

Yellow on black "Expect Delays" traffic sign

A Serious Critique of Congestion Costs and Induced Vehicle Travel Impacts

Some highway advocates continue to claim that roadway expansions are justified to reduce traffic congestion. That's not what the research shows. It's time to stop obsessing over congestion and instead strive for efficient accessibility.

March 14, 2023 - Todd Litman

A toll payment facility in Florida.

Tolling All Lanes

Bay Area transportation planners are studying a radical idea to reduce traffic congestion and fund driving alternatives: tolling all lanes on a freeway. Even more radical, the plan considers tolling parallel roads.

2 hours ago - San Francisco Chronicle

Close-up of person holding up smartphone next to contactless fare reading device on bus

Federal SMART Grants Awarded for Transportation Safety, Equity Projects

The grant program focuses on the use of technology to improve safety, accessibility, and efficiency in transportation.

3 hours ago - U.S. Department Of Transportation

Seattle Transit

Fare Enforcement Upheld by Washington Supreme Court

But using armed police to enforce fare payment is less than ideal in the eyes of the top court in the state of Washington.

4 hours ago - Crosscut

Planner II

City of Greenville

Planner I

City of Greenville

Rural Projects Coordinator (RARE AmeriCorps Member)

Resource Assistance for Rural Environments (RARE) AmeriCorps Program

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.