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When Will Zillow’s ibuying Exit Really Hit Real Estate?

When ZG announced that it was exiting the ibuying market at the beginning of November, it was natural to think that competitors like OPAD and OPEN might see benefits as early as 2021Q4.  However, real estate timelines are rarely that quick.  Even if Zillow was fully wound down from new purchases, it would still likely have houses under contract where the purchase hadn’t even been completed, purchased homes waiting for contractors to make improvements, and renovated homes still listed.  Luckily, our CE Web data is able to capture ibuying activity on a state-by-state basis with daily delivery so that it will be the first to catch if and when an inflection point does occur.

In 2021Q3, ZG’s ibuying business accounted for over one third of all new ibuying listings across tracked platforms.  It held almost double that share in Oregon and Colorado, with over 50% share in Minnesota and California and over 40% in Florida.  Although every market where ZG competed with OPAD also had a presence from OPEN, in Q3 ZG went head-to-head with OPEN in CA, MN, and OR.

Share of New Listings by State

Note:  ibuying only

If and when ZG’s exit from ibuying begins to have an impact, one natural place to look is to see if OPAD or OPEN are seeing upside from their rival’s woes is to see if they are increasing listings in states with the highest ZG presence faster than in the market overall.  For OPAD, listings in Colorado were growing throughout Q3.  And while they are still on a positive trajectory, it is inconclusive as to whether ZG’s exit has accelerated that trend and the extent to which the overall real estate market is playing a part.  Similarly, although OPEN is growing listings in California, that trend started in the middle of September and is hard to attribute to competitive activity.  Listings in Florida have begun to go up in recent weeks beginning early December, so this trajectory may be worth following to see if additional growth comes as ZG continues its winddown.

New Listings in Key Markets

Note:  ibuying only

One other place to look for impact is to see if the price of new listings has changed with fewer ibuying competitors in the marketplace.  In general, there does not appear to be much of a pattern so far in terms of a shift in pricing mix for either OPAD or OPEN.  However, as home records become available, Consumer Edge captures the purchase price that ibuyers paid for the home.  It may be that while each company’s list price is remaining the same, they are able to take advantage of lower purchase prices with less competition and turn it around to a higher margin when the home is sold.  So although the data is currently showing limited impact to ZG’s market exit in 2021Q4, continued monitoring will be able to pick up exactly when (or if) benefits start to accrue and even how much those benefits are impacting the top versus bottom line.

New Listing ASP in Key Markets

Note:  ibuying only