The U.S. and China are locked in a trade war that will boost the prices of many material inputs for the home renovation and construction industries. The higher costs also are likely to impact a potential industry disruptor, iBuyers, Housing Wire reports. Companies such as Zillow, Opendoor, and Offerpad have invested in new markets with plans for fixing up and reselling homes. An iBuyer is a company that uses technology to make an offer on homeowners' homes instantly and many also involve repairs, financing, and selling in their business models.
Many of the products iBuyers need to paint, repair and in some cases renovate kitchens and other rooms will become more expensive in the next few months as the U.S. importers who pay the tariffs pass on the added costs to American consumers. The National Association of Home Builders said tariffs will boost housing construction and renovation costs by $2.5 billion.
“In iBuying, it's razor-thin margins anyway, so any sort of ripple in the pond has the potential to disrupt,” said Mike DelPrete, a real estate strategist who tracks the iBuying market. “What’s happening right now in iBuying is a land grab, and a lot of these companies don’t need to be profitable right away. But if you're a big iBuyer and you're buying and selling thousands of homes a month, higher costs have a potential impact.”
Zillow is the iBuyer who is expanding the fastest. It purchased 898 houses and sold 414 in the first quarter, the company said in its earnings report last week. That was a gain of 80% and 200%, respectively, compared to the fourth quarter.
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