Black homebuyers, who are less likely than their white counterparts to have jobs that can be done remotely, face steeper home price increases as white homebuyers move to more affordable suburbs

Seattle, WA – Sept. 14, 2020 (PRNewswire) (NASDAQ: RDFN) — Home prices in neighborhoods where Black people bought homes in 2019 were up 7% in July, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That’s higher than the 6% price increase in neighborhoods where white people purchased homes last year. The pace of price growth remained unchanged from pre-pandemic rates in February in both groups of neighborhoods.

For this analysis, Redfin used data on home sales during the pandemic looking separately at Census tracts where Black people bought homes in 2019 and neighborhoods where white people bought homes in 2019, according to the Home Mortgage Disclosure Act (HMDA) data. Neighborhoods where Black people bought homes and neighborhoods where white people bought homes are not mutually exclusive.

In the months since the pandemic spread across the U.S. (May to July) home sales fell 15% from last year in neighborhoods where Black people bought homes. Meanwhile, home sales fell 13% in neighborhoods where white people bought homes. Before the pandemic in February, sales were up in both types of neighborhoods, but were growing twice as fast in neighborhoods where white people bought (8%) as in neighborhoods where Black people bought (4%).

“There may also be an increase in gentrification of neighborhoods where Black people bought homes,” said Redfin chief economist Daryl Fairweather, who authored this report. “Black people have struggled more than white people to make mortgage and rent payments during the pandemic. Investors may see that as an opportunity to buy up affordable homes and apartments and renovate them to appeal to wealthier buyers and renters, further reducing the number of affordable homes available to Black people.”

She continued, “This pandemic-driven recession is already disproportionately hurting Black American employment with the Black-white jobless gap widening. After the 2008 recession, the Black-white homeownership gap widened by 5%. And after the pandemic ends, the Black-white homeownership gap may worsen even more than it did following the 2008 recession.”

The higher price growth and deeper sales decline in neighborhoods where Black people bought homes has likely been due to bigger declines in homes being listed for sale, with new listings down 19% year over year in July, compared to a 12% drop in neighborhoods where white people bought homes. Both types of neighborhoods were experiencing declines in new listings in February, before the pandemic began, down 9% year over year in neighborhoods where Black people bought homes and down 6% year over year where white people bought.

“During the pandemic, many homebuyers have been looking to live in more affordable suburban and rural areas because of the new normalization of remote work,” said Fairweather. “But only 20% of Black workers can do their jobs remotely compared to 30% of white workers. This means that Black homebuyers are less likely to relocate away from the neighborhoods where they bought homes before the pandemic began. And because those neighborhoods have seen steeper increases in prices and larger declines in new listings, Black homebuyers are at a bigger disadvantage than white homebuyers during the pandemic.”

Investors crowding out first-time homebuyers in Newark

Newark saw the biggest annual home price increase (14%) in neighborhoods where Black people bought homes. Meanwhile, in Newark neighborhoods where white people bought homes, price growth was up 6% year over year. Home prices were already rising quickly in neighborhoods where Black people bought in Newark even before the pandemic began—back in February 2020 home prices were up 12% year over year in neighborhoods where Black people bought, and up only 5% year over year in neighborhoods where white people bought.

“The vast majority of homebuyers in Newark are investors,” said local Redfin agent Marci Macedo.

Only 23% of homes are owner-occupied in Newark compared to 64% nationwide. The number of new listings in July declined 13% in neighborhoods where Black people bought homes, but increased 1% where white people bought in Newark from last year. Homebuyers in Newark have to compete for the few available homes for sale with investors looking for safe long-term investments during the pandemic driven recession.

Home sales down 32% in San Francisco neighborhoods where black people bought homes

Home sales were down the most in July in neighborhoods where Black people bought homes in San Francisco, where home sales were down 32% from a year ago. By comparison, home sales were down 8% year over year in neighborhoods where white people bought homes in San Francisco. In July, price growth was up more in neighborhoods where Black homebuyers bought (up 2% year over year) compared to neighborhoods where white people bought (up 1% year over year). San Francisco is the second least affordable metro in the country for Black residents. Only 34 Black people bought homes in San Francisco in 2019, compared to 1,992 white homebuyers, according to mortgage origination data.

The lack of home sales in San Francisco is not due to a lack of listings, but due to a lack of demand as San Franciscans leave the city. New listings were up 14% year over year in neighborhoods where Black people bought homes. Meanwhile, new listings were up 11% year over year in San Francisco neighborhoods where white people bought homes. Before the pandemic, new listings were falling—down 8% in neighborhoods where Black people bought and down 2% in neighborhoods where white people bought.

As highly paid tech workers leave San Francisco during the pandemic, there could be a reversal of gentrification. San Francisco rents are falling, and home prices may soon follow, making San Francisco a more affordable place to live for both Black and white residents.

To view the full report, including charts and methodology, please visit: https://www.redfin.com/blog/black-homebuyers-more-impacted-by-housing-shortage-rising-prices/

About Redfin
Redfin (www.redfin.com) is a technology-powered residential real estate company, redefining real estate in the consumer’s favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we also run the country’s #1 real estate brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Since our launch in 2006, we have saved our customers over $800 million and we’ve helped them buy or sell more than 235,000 homes worth more than $115 billion.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.

SOURCE Redfin

An appealing option for homeowners seeking liquidity, certainty and safety, iBuyers are now making a comeback after purchasing the fewest homes in more than three years in the second quarter

Seattle, WA – Sept. 11, 2020 (PRNewswire) (NASDAQ: RDFN) — The nation’s top iBuyers bought 880 homes in the second quarter, or 0.1% of homes that sold across more than 400 U.S. metros, according to an analysis from Redfin (www.redfin.com), the tech-powered real estate brokerage.  That is down 88% from 7,410 homes, or 0.6% market share, a year earlier and represents the smallest number of properties purchased by iBuyers since the first quarter of 2017. All of the major iBuyers, including RedfinNow, Opendoor, Zillow and Offerpad, suspended purchases at the beginning of the coronavirus pandemic and began to slowly reopen in May and June as the housing market began to recover. In dollar terms, iBuyers spent just $195 million buying homes in the second quarter, compared with $1.6 billion a year earlier.

The Redfin analysis used MLS and public records data to identify home purchases and sales made by the most well-known national iBuyers. The term “iBuyer” (short for instant buyer) is used to describe real estate companies that purchase houses from homeowners in quick, cash transactions. These companies then make any necessary improvements and resell the homes.

While iBuyer market data isn’t yet available for July and August, Jason Aleem, vice president of RedfinNow, said he has seen a major uptick in demand over the last few months.

“The pandemic has brought a lot of folks into the market who need liquidity, certainty and a safe and contactless way to sell their home,” Aleem said. “RedfinNow is working with several move-up buyers who need a bigger house with room to work from home, as well as parents moving closer to their adult children.”

“One trend that has ramped up since the pandemic began is the iBuyer bidding war,” Aleem continued. “Homeowners are seeking out offers from multiple iBuyers so they can feel confident they are getting the best possible price in this blazing hot market without a bunch of foot traffic coming through. As a result, iBuyers are making more competitive offers.”

In the second quarter, Phoenix saw the most significant slump in iBuyer market share, with iBuyers acquiring 0.8% of homes that sold there, down 3.3 percentage points from the second quarter of 2019. Raleigh and Las Vegas saw the second and third biggest drops, falling 2.9 and 2.7 percentage points, respectively. Despite Phoenix’s outsized loss, its 0.8% market share was the highest among the top iBuyer markets. Raleigh and Charlotte came in second and third place, both at 0.6%. Las Vegas and Atlanta rounded out the top five, at 0.5% and 0.4%, respectively.

iBuyers Sold Homes Much Faster Than Last Year in the Second Quarter

In the second quarter, iBuyer-owned homes found a buyer after being listed on the market for a median of 13 days, down from 40 days a year earlier. A typical, non-iBuyer home spent 37 days on the market, unchanged from a year prior.

“Back in early spring when the market was reeling, RedfinNow was very aggressive with our listing prices and price drops, which helped us sell homes faster,” Aleem said. “Redfin’s Direct Access, which allows buyers to use our app to tour listings without an agent, also made it safe, fast and easy for buyers to tour our homes, all of which are vacant. The buyers’ agents we worked with told us our homes were selling in part because their clients felt comfortable touring them on their own.”

iBuyers Bought Less Expensive Homes Than Last Year in the Second Quarter

iBuyers bought homes for a median of $241,100 in the second quarter, down from $250,000 a year earlier. In all but one iBuyer market where sale price data is available, iBuyers purchased homes for less than the metro-area median. The only exception was Riverside, CA, where the median iBuyer purchase was $400,000, approximately $6,000 higher than the metro-area median sale price.

The full report complete with charts, metro-level data and methodology is available at: https://www.redfin.com/blog/ibuyer-real-estate-q2-2020.

About Redfin
Redfin (www.redfin.com) is a technology-powered residential real estate company, redefining real estate in the consumer’s favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we also run the country’s #1 real estate brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Since our launch in 2006, we have saved our customers over $800 million and we’ve helped them buy or sell more than 235,000 homes worth more than $115 billion.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.

SOURCE Redfin