Rocket Companies has taken yet another step to expand its business line, this time announcing a foray into iBuying. According to an announcement from the organization, which also includes Rocket Mortgage, Amrock, and ForSaleByOwner.com, its iBuying arm will kick off later this year and operate through third-party companies.
The move comes at a good time. iBuyers have picked up steam in recent months, and many in the game are actively expanding. It's also a solution more homeowners are warming up to.
In fact, a recent survey from consulting firm 1000watt shows that 82% of homeowners would respond either very or somewhat positively to an iBuyer's offer. Another 77% said they would take 5% to 10% less for their house just to avoid the hassles of selling.
Still, that doesn't mean iBuyers are going to take over the market -- nor that investors need to be particularly worried. Here's what you'll want to think about as Rocket makes its next move.
1. They're a drop in the bucket
While it's true that iBuyer purchases are recovering post-pandemic and that more homeowners are open to the idea of them, they still represent a very small number of sales in the grand scheme of things.
According to real estate brokerage Redfin, just 0.5% of all home sales were from iBuyers in the first quarter of the year, accounting for a mere 4,383 sales nationwide. While it's certainly notable in an inventory-strapped market like today's, it's not going to change the game entirely for investors -- especially those who are more seasoned.
2. Certain types of investors may see more impact
iBuying companies won't purchase just any old property. They generally focus more on entry-level homes and properties that are close to move-in ready. Sure, they'll repaint and make repairs where necessary, but they aren't out there buying full-on fixer-uppers. So, fix-and-flip investors? You're probably fine.
They also don't buy multifamily homes, so investors in this realm are safe, too. If you're looking for potential single-family rentals in the suburbs, though? They might have a bit more influence.
In 2019, the average iBuyer-purchased home -- at least in Texas -- had three to four bedrooms and between 1,900 and 2,300 square feet. Earlier this year, the average home purchased by an iBuyer had a price of around $302,050 -- just under the national median for that quarter.
3. Certain markets may be impacted, too
There aren't iBuyers in every housing market. In fact, they're largely concentrated in a handful of metros in the South. In Raleigh, North Carolina, for example, iBuyer purchases accounted for nearly 3% of all home sales in the first quarter. In nearby Charlotte, it was 2.7%.
Other markets where iBuyers are more active include Durham, North Carolina; San Antonio, Texas; and Phoenix and Tucson, Arizona. It's pretty likely Rocket's new iBuying arm will try to stake a claim in these cities, too, so investors who frequent these markets may see a slight impact -- both on supply and competition.
The bottom line
Obviously, any new competition makes things a bit harder for investors, but the impact of Rocket's latest move won't be felt across the board. Until we know just where this new iBuying arm will operate, as well as what types of homes it will purchase, it's hard to say just what it means -- and for who.