To all the agents in the house,
One of the more astonishing figures in real estate lately was that Opendoor lost $662 million in 2021. Not only is that a lot of money, but the iBuyer's net income loss was significantly worse than Zillow, which, of course, did so poorly on iBuying that they wound down their program (Zillow reported a $528 million net income loss in 2021).
Would Opendoor ever become profitable? Or was it just another hopeless SoftBank Vision-funded real estate company (e.g. We Work) good at raising money but lousy at running a business?
Well, Thursday evening we got some provisional answers: "Yes!" and "Maybe not!"
Proving all the doubters wrong (don't know who those are), Opendoor announced $28 million in net income for the first quarter, a turnaround from all of last year but especially quarter one when the San Francisco-based company lost $270 million.
This massive turnaround came as Opendoor continued mimicking the growth of an adolescent with a rapid metabolism, posting $5.2 billion in revenue, 590% growth year-over-year. Opendoor sold a record 12,669 of the homes it bought in quarter one, according to an investor presentation, five times more than the first quarter of 2021.
"We met very strong elevated demand for housing," said Carrie Wheeler, Opendoor's Chief Finance Officer on Thursday's earnings call. "We expected to see really high sell-through rates for inventory and we did, but we probably sold more homes" than Opendoor even expected.
Whether Opendoor can sustain this turnaround, or exactly how the company values profit versus growth right now, is not clear. While Opendoor CEO Eric Wu acknowledged that the company is not immune to market downturns, including inventory falling through the floor, Wu said, "Our systems and margin structure are designed to be durable against different housing markets."
Regardless, Opendoor's quarter comes amid iBuyer younger cousin Offerpad posting yet another profitable quarter, making $41 million in quarter one.
Companies profiting on iBuying is still a bit of a man bites dog story, though Offerpad has now posted modest incomes in three out of the last four quarters.
The potential success of Opendoor is interesting to me as a reporter who has expressed skepticism about the business. It might also be interesting to agents, if the company can actually grow to the point of affecting home prices and inventory in your local markets.
Agents, what are you seeing with iBuying? And what do you think of this Opendoor news?
Please send me your thoughts anonymously to mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
.png?width=1116&upscale=true&name=970x250-original%20(1).png)
EmoticonEmoticon