IBuyers, that new label for real
estate agencies that buy homes from sellers rather than just listing them, are
back in the hunt. Redfin announced late last week that its RedfinNow subsidiary
was about to resume operations, joining Opendoor and Offerpad which have
already reopened after COVID-19-driven shutdowns. Zillow has said it would gradually
relaunch its Zillow Offers division in upcoming weeks.

But Redfin CEO Glenn Kelman made a more
startling statement
as well. In an interview with Jacob Passy published in MarketWatch,
he declared that vacation markets are “toast,” and AirBnb owners are rushing to
unload their properties. They are going too be in tough shape, he said. “There’s
a whole economy that was built around the liquidity there that Airbnb provided.
You could get pretty deep into debt and still have somebody pay your mortgage
every month because Airbnb and other travel websites were so good at finding
someone to rent it out. And I don’t think many of those folks have the reserves
that Marriott or that Hilton does.”

Kelman said Redfin’s tech offerings,
such as virtual home tours and open houses will help it during the pandemic and
that, while buyers and sellers may be coming back to the market, the speed of
recovery is far from certain. They are opening their RedfinNow division because
it still seems to be a reasonably good time to own a house. Inventory is down
about 25 percent
compared to a year ago, but the demand is almost back to
pre-pandemic levels. While the company is willing to take a risk, it will
probably lower its offering prices just to give it more margin for error.

He said his company and others as
well would probably be less willing to take on a house that could turn into a
major project. One always had to account for the possibility of a downturn
between buying and selling, but actually going through it means less appetite undertaking
a transaction where it might take six months to figure out if you offered the
right price.

“If you took a basketball shot, and
six months later somebody told you whether it went into the hoop, you’d never
get to be a better basketball player, right? So, I think we’re just being more
disciplined about the kinds of homes we buy. If  you make a mistake on five houses, you should
not buy 5,000.

He is unsure whether the pandemic
will make the iBuying concept more popular even though it eliminates a lot of
the face-to-face
interactions of real estate. He thinks all iBuyers are going
to price risk into their offers and he doesn’t know if sellers are going to
accept that.

He sees resurgence of demand but
says it is a bifurcation of the American dream. It has become a privilege and many
of the privileged class have fared better in the pandemic than people who work
in restaurants and provide other in-person services. “Unemployment is going to
be bad for one part of America; for another part, it isn’t as bad. And so
that’s the part that’s buying a house,” he said.

By Jann Swanson , dated 2020-05-18 16:43:38

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Courtesy of Mortgage News Daily

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