The Impact of iBuyers on Housing Market Dynamics

David M. Harrison (), Michael Seiler () and Liuming Yang ()
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David M. Harrison: University of Central Florida
Liuming Yang: The Chinese University of Hong Kong

The Journal of Real Estate Finance and Economics, 2024, vol. 68, issue 3, No 3, 425-461

Abstract: Abstract Technological innovation continues to disrupt virtually every sector of the U.S. economy. This paper explores one such innovation, namely iBuyers (i.e., firms who use PropTech to provide online quotes and make quick cash offers on homes), and studies their impact on various housing market dynamics. More specifically, we find the presence of iBuyers increases home prices in local markets by up to 2.8%. We further hypothesize that strategic behavior on the part of home sellers, and particularly increased “fishing” for high offers after the entrance of iBuyers into a market, helps explain this phenomenon. This explanation is strongly supported by an observable increase in both time on market (TOM) and listing prices following the entry of iBuyers. Lastly, we find iBuyers compete with and crowd out potential local homebuyers, forcing them into neighboring markets, and thereby causing home prices in these adjacent ZIP codes to increase as well.

Keywords: PropTech; iBuyers; Housing market; Fishing; Spillover effects (search for similar items in EconPapers)
JEL-codes: D12 D4 G10 L1 L8 R2 R20 R3 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11146-023-09954-z

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