The real estate market carnage continues with all the major iBuyers pausing home purchases thanks to the coronavirus.
Zillow Offers Pauses Purchases
This morning, Zillow announced that it had stopped home buying via Zillow Offers amid the “market uncertainty” related to COVID-19.
While it’s unclear if it was mandated, they did note that the move was “in response to local public health orders related to COVID-19,”and also to ensure the protection and safety of its staff, customers, and partners.
Specifically, some states like California have implemented emergency orders requiring individuals to stay at home and cease all non-essential business, which includes some real estate activities.
The company said it would continue to market and sell homes through Zillow Offers, despite halting open houses for its homes last week.
Zillow said it ended 2019 with 2,707 homes in its inventory, and as of March 19th, had reduced it to approximately 1,860 homes.
All 24 markets where Zillow Offers currently operates are affected by the move.
Opendoor Cash Offers Suspended
Meanwhile, Opendoor is putting cash offers on hold as a result of COVID-19.
In a statement posted on their website, the iBuyer said, “If you’re currently in our offer process, be on the lookout for communication from us. If you’re not, here’s how we can still help with your home sale.”
In terms of that help, they are still allowing third parties to make a cash offer for your property, as opposed to Opendoor itself.
If you take them up on that option, you can still skip the showings, prep work, and choose you own close date.
They said they’ll get back to customers via email within 2-3 days if eligible.
You can also use one of their partner real estate agents to list your home in traditional fashion, though I think we all know selling right now probably doesn’t make a ton of sense unless absolutely necessary.
Offerpad Might Be on Hold Right Now
I visited Offerpad’s website to see how they were being impacted, but couldn’t get a totally clear answer.
However, they do have an “important notice” posted at the top of their website that reads:
“To ensure that our customers, employees, and third parties are safe to the best of our ability, our processes have been subject to temporary changes.”
“We need to ensure that all services, including third parties, associated with a customer’s purchase or sale will be available. We appreciate your flexibility during this time.:
So there’s a good chance they are following suit and putting new purchases on hold as well.
As reported last week, RedfinNow was the first to temporarily halt home purchases, as indicated in an 8-K filing.
Two Takeaways to Consider
One issue, as mentioned by Zillow, is that real estate isn’t necessarily an essential business activity.
At least when it involves investors trying to make money by buying and selling real estate.
For everyday Joes looking to buy or sell a home, I assume it’s still okay to do so. It certainly can be argued as essential in certain situations.
However, a bigger concern is if this is the canary in the coal mine.
If billion-dollar companies like Redfin and Zillow aren’t interested in buying our homes, what does that say about the health of the real estate market?
I think the worry is if this situation doesn’t improve in the next several months, we might see scores of foreclosures flood the market, which could lead to lower home prices.
Conversely, if the government and loan servicers get ahead of it and work hard to help unemployed homeowners, things might turn out okay.
And really, with all the spending going on, there’s bound to be inflation, which could benefit homeowners as the world recovers.