The Austin Business Journal just came out with an article today, titled Austin housing inventory stuck at worrying low level, which I thought was a very appropriate title. It left a lot of things out that I thought would be worth commenting on. There are some circumstances that were not touched on in this article.
Number one, we had a new strain of coronavirus, Omicron and it has affected sales obviously and put people that would have been planning on selling in November, December and January out a couple of months. Number two, it was not reported that 8.5% of all sold listings in January were listings sold by Opendoor. It is a staggering number and on the surface, it looks like something very worrying.
What they don’t realize is, those are the homes that they sold on the market. When Opendoor sells a property, they will first release the inventory to people, open their apps up and sell those off-market. We don’t really see that inventory, and they’re also selling to institutional buyers. In my opinion, Opendoor is not a very sustainable business, but I could be wrong and I don’t think that a consumer will get the best deal by only going to Opendoor.
You can sell your home and in some cases, Opendoor will sell your home or we’ll buy your home at a price that is higher than the market would give. I suggest, work with a real estate agent like us who has a platform that will send it out to all of the potential buyers out there, including these iBuyers. Before we list on the market, we get to these people including institutional buyers that are trying to buy a property off-market. We have a platform for that and we have a solution for that and we can help our sellers make the right choice in the process.
Inventory Problem with Opendoor
The issue getting back to the inventory problem with Opendoor, as I see, people don’t realize is when talking to other real estate agents, Opendoor is not really winning when it comes to buying property in the hot months of the year and the highest part of the season. So if you take it from now, until mid-July or August, it’s almost certainly not going to be a good option for a home seller to sell their home to open door.
What they do is when the market starts to slow down, they get more opportunities to buy properties. And what we have seen in the last couple of months with Opendoor, our properties are hitting the market. They put these properties in their queue to be renovated and it’s not good renovating these properties.
A lot of these properties that we saw in November and December in Opendoor listings had been on the market for a long time. In January, when the market started heating up, we saw a whole lot more. So, I don’t think Opendoor is going to be that big of a problem. In the coming months, we will see some inventory, but I would be shocked if we saw anywhere near the level of 8.5%.
Pandemic Impact and Getting More Housing Inventory in Austin
The moral to this story is the conditions of coronavirus are not prevalent anymore, at least not for this moment in time. In my opinion, I don’t think Opendoor will have as big of a market share in the coming months as I have seen in January. And because this current Omicron variant is subsiding and people are getting over this, we’re gonna see more inventory hit the market in the coming months now.
We still have a huge inventory problem in Austin, and that will still be a problem. But builders are doing better at keeping up in central Austin. It’s really tough, especially off-market and I think the only way that we’re going to be able to get more inventory and to deal with this inventory problem is if the zoning laws change, and that is a tough nut to crack. We need to provide more density for builders and developers to put more units on properties. The old-time, Austin, the nimby’s, as they call them, not in my backyard, do not want that. But as long as these jobs keep coming, it’s a problem that we need to solve.