The institutional homebuying slowdown: Insights from Opendoor's operations

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During the peak of the Pandemic Housing Boom, the frenzy was so fierce, and there was so much liquidity sloshing around the U.S. housing market that many large operators were going directly to Opendoor to purchase homes.

However, the rise in interest rates has caused a big decline in institutional landlords directly purchasing from Opendoor.*

According to a new analysis by SFR Analytics, while over 25% of properties sold by Opendoor in June 2022 were purchased by institutional investors, that figure plummeted to less than 3% in 2023. (SFR Analytics defines "institutional investors" as legal entities that own more than 100 properties).

The analysis by SFR Analytics finds…

In 2021, 11 different institutional investors bought more than 100 properties each from Opendoor.

In 2022, 14 different institutional investors bought more than 100 properties each from Opendoor.

In 2023, only Pretium bought at least 100 properties from Opendoor.

Click here to view an interactive version of the chart below

Unlike during the Pandemic Housing Boom, capital markets are now working against mega investors, and fewer homes on the market today pencil the returns institutions need to see to pull the trigger.

This analysis conducted by SFR Analytics is just further proof that institutional homebuying still remains subdued.

On a national level, institutional operators are still smaller players. For instance, large operators with at least 1,000 homes in their portfolio, own around 1% of the U.S. single-family stock, according to Parcl Labs.

*Opendoor is a real estate technology company/iBuyer that facilitates a “simplified” method for homeowners to sell their properties. It provides a digital platform where homeowners can promptly receive offers for their homes, theoretically "streamlining" the selling process. Opendoor then charges a fee to the seller and proceeds to renovate and flip the home back onto the market.

The state of the U.S. housing market, as told by ResiClub

On Thursday, ResiClub is hosting a free webinar to discuss the housing sector.

It’s based on what we’re seeing in the data RIGHT NOW—including regional differences.

Housing market tailwinds. Housing market headwinds.

The webinar will be at 1 pm ET on Thursday.