Opendoor Withholds Listings From the Market

In late 2020, while Opendoor continued to purchase hundreds of homes each week, it stopped listing new homes for sale. This unusual behavior lasted four weeks, and reveals an interesting consequence of the rise of new models in real estate, specifically iBuyers.

Between November 10th and December 10th, Opendoor listed no new homes for sale in any market, nationally (Opendoor also did not list homes during the week of Christmas). For comparison, during the same period Zillow continued purchasing and listing new homes for sale.

During this time, Opendoor continued to purchase homes from consumers. Its purchase levels in November and December -- while still well below the levels of 2019 -- remained robust, with no visible slowdown.

The result of Opendoor's action -- during the run up to its IPO -- created an artificial buildup of inventory. It was a concerted, company-wide effort -- but what was the purpose?

Understanding Why

Here's a hypothesis: An iBuyer books revenue when a home is sold. By withholding listings for a month, Opendoor pushed back the likely period when those houses would sell (and it would book revenue) into 2021 -- to its first full quarter as a publicly listed company.

Regardless of the specific reason for the action -- pumping up revenue numbers, maximizing home appreciation, or simply taking a break before the holidays -- a decision was made, and the results are the same: Opendoor's inventory of houses increased by withholding new listings from the market.

Implications for Consumers

While a relatively small move that kept 300⁠–400 houses off the market for an additional month, Opendoor's action is an example of what happens when home purchasing power aggregates to one company. (A previous example is Opendoor and Zillow's systematic move to reduce buyer agent commissions.)

What happens when a company -- backed by Wall Street and motivated by profit -- has the ability to withhold listings from the market in the midst of a once-in-a-generation housing shortage? With the rise of new models that change the paradigm of home ownership, careful attention should be paid to a possible collision between what's good for a company, and what's good for the consumer.