Home-Buying Companies Stuck With Hundreds of Houses as Demand Slows

Ribbon Home Inc. had a fast-growing business during the housing boom. The New York City-based startup purchased homes with cash on behalf of buyers. Then it sold the homes to the buyers at the same price, plus a fee, once the buyers got a mortgage.

This approach made their clients’ offers more appealing, since sellers often prefer all-cash transactions that can close quickly and are considered more reliable. Ribbon has been active in hot markets such as Atlanta and Charlotte.

But last year as mortgage rates surged, some Ribbon customers backed out of their purchases or needed more time to get financing. That left the company owning nearly 400 homes, according to property records analysed by research firm Attom Data Solutions and confirmed by the company.

Ribbon is one of a handful of young companies known as power buyers. These firms created a niche business around helping home buyers gain an edge during the hyper competitive housing boom. Now that the market has cooled, some of these companies are stuck with hundreds of homes they acquired on behalf of clients.

Orchard Technologies Inc., another power buyer that has been active in places such as Denver and Dallas, helps customers buy a new home and move before selling their previous home. If clients can’t sell their homes after four months, Orchard agrees to buy them.

The company now owns about 200 homes its customers were unable to sell, said its Chief Executive Court Cunningham. Mr. Cunningham said Orchard has had to buy homes from customers three times as frequently over the past six months.

The unanticipated glut of homes these firms are carrying is an example of how housing-oriented companies that thrived when mortgage rates were super low are struggling to survive in a higher rate environment.

Online home-flipping companies also experienced turbulence as rates surged. Opendoor Technologies Inc. last year slashed prices on thousands of homes it purchased near the height of the market. The company reported huge losses and laid off 18% of its workforce.

Ribbon has let go of about 170 employees, or 85% of its staff, but it still needs to unload its surplus of houses. About half of those homes Ribbon will try to sell on the open market because their customers didn’t follow through on their purchases. People backed out because they didn’t want to sell their current homes in a down market, had credit issues or had a life event that changed their plans, said Shaival Shah, Ribbon’s chief executive.

The other half the company hopes to sell to the original customers. Most of those customers are renting from Ribbon, and some have asked for more time to obtain financing, Mr. Shah said.

Some power buyers say they are optimistic the housing market can stabilise, and recently there have been a few signs that buying may be picking up.

Power buyers say that their business will continue to serve home buyers in competitive markets and help even the playing field with investors, who often purchase homes with cash. Meanwhile, many are focused on improving products aimed at prospective sellers who are nervous to list their homes in a slow market.

“There was sort of a power shift, from the power sitting with the seller knowing that their home is going to sell within a day, to the power sitting with the buyer,” said Tim Heyl, founder of the Austin-based power buyer Homeward Inc.

Ribbon, which halted its cash-buyer program last year, said it is developing new products before it restarts. HomeLight Inc., another power buyer, recently changed up one of its main offerings so that it wouldn’t buy as many homes moving forward, said Drew Uher, the company’s chief executive.

Mr. Cunningham, of Orchard, said his company has reduced losses from homes it acquired by charging customers fees on both the sale of their previous homes and the purchase of their new homes. He said seller demand for backup offers from Orchard is rising given ongoing uncertainty about home sales.

Some executives said they don’t expect every power buyer to survive. Many relied on venture capital to grow during the height of the housing market, but they are unlikely to raise as much money now. Between January and late November 2022, venture investment in proptech companies decreased 21% compared with the same period the year prior, according to a report from Keefe, Bruyette and Woods Inc.

“People were doing all sorts of things to outbid or be the most competitive offer,” said Diane Vanna, a real-estate agent at Baird & Warner in Chicago, who in 2021 represented a buyer who won a bidding war against 36 other offers. “Now it’s really levelled off.”

Australia’s housing market staged a turnaround in 2025, defying intense affordability and cost-of-living pressures to deliver an above-decade-average growth rate of 7.7% through the year-to-date.

Cotality’s annual Best of the Best report, a detailed nationwide breakdown of the suburbs that rose fastest, had the highest rent return or offered the most accessible entry points, identifies which markets led the year’s recovery.

National dwelling values are set to close 2025 at least eight per cent higher, a result Cotality Australia Head of Research Eliza Owen says highlights how quickly conditions shifted after a challenging start.

“Markets entered 2025 under considerable pressure. Affordability had hit a series high, serviceability was stretched and price growth had flattened out. What followed was an unexpectedly strong rebound as interest rate cuts, easing inflation and limited supply reignited competition,” Ms Owen said.

Three rate cuts, an expansion of the 5% Home Guarantee Deposit Scheme and persistently low listing volumes helped drive the recovery, with the housing market recording three consecutive months of growth of at least 1% by November and reaching a new high of $12 trillion.

Owen said the turnaround was most visible across lower-value markets and regions where buyers were able to respond quickly to more favourable credit conditions.

“Tight supply meant even modest demand created upward pressure on prices. Cheaper markets were had the most acceleration because they remained within reach for buyers navigating higher living costs,” she said.

Prestige Sydney remains Australia’s price leader

Sydney’s top-end suburbs sat in their own price bracket in 2025, widening the gap between premium enclaves and the rest of the country.

Point Piper led the national list with a median house value of $17.3 million and unit medians above $3.1 million, followed by long-established areas such as Bellevue Hill, Vaucluse,

Tamarama and Rose Bay.

Owen said the resilience of premium Sydney markets was in sharp contrast to affordability pressures elsewhere.

“Affordability constraints were a defining feature of 2025, yet premium markets continued to operate on their own cycle. These suburbs are far less sensitive to borrowing costs and

listing trends, which is why their performance often diverges from the broader market,” she said.

Mosman recorded the highest total value of house sales nationally at $1.58 billion across 229 transactions, underlining the scale of turnover even in a year of strained serviceability.

Lower-value suburbs delivered the strongest gains

Western Australia dominated high house value growth in 2025, with Kalbarri increasing 40.2% to $515,378 followed by Rangeway (32.2%) and Lockyer (32.0%).

Similar trends emerged in the unit market, with strong results concentrated in Queensland’s mid-priced regions such as Cranbrook (up 29.3%) and Wilsonton (up 26.9%).

Ms Owen said the performance of these markets highlighted the role of affordability at a time of constrained borrowing power.

“Lower value areas offered buyers an opportunity to get into the market if they had the capacity to service a mortgage. Once interest rate cuts started to flow through, demand lifted

quickly in those areas where prices had further room to grow,” she said.

“Investors were a particularly strong driver of demand in markets across WA and QLD, where the share of new mortgage lending to investors reached 38.3% and 41.1%

respectively.”

Perth, Brisbane and Darwin lead capital-city upswing

Darwin posted the strongest rise among the capitals at 17.1% through the year-to-date, following a flat result in 2024, joined by Brisbane and Perth as Australia’s three top-performing capital cities.

The fastest growing capital-city suburb for houses was Mandogalup in Perth (up 33.0% to $944,609), alongside several outer Darwin suburbs where more moderate entry points below $600,000 supported stronger value growth.

The most affordable capital-city suburbs for houses were clustered around Greater Hobart, including Gagebrook, Herdsmans Cove and Bridgewater, all with medians under $450,000.

Suburbs in Adelaide and Darwin provided some of the best value for unit buyers, with medians ranging from less than $250,000 in Hackham, Adelaide to $328,416 for Karama in Darwin.

Biggest gains and the steepest falls in regional Australia

Strong upswings in WA and Queensland contrasted with declines in other regional pockets.

House values fell 11.6% in Millthorpe (NSW) and 10.5% in Tennant Creek (NT) while several unit markets recorded annual declines, including South Hedland (down 14.1%) and Mulwala (down 11.8%).

Owen said these differences reflected the uneven backdrop of supply levels, migration flows and localised demand.

“Some regional areas are still benefiting from relative affordability and tight rental conditions.

Others are adjusting to earlier periods of rapid growth or shifts in local economic activity,” she said.

Mining towns produced the highest yields

Rental demand remained firm across key resource corridors in regional WA and parts of regional Queensland, where constrained supply, strong employment bases and short-stay

workforces contributed to some of the highest yields in the country.

Newman, in the Pilbara, delivered the strongest house yields at 12.6%, reflecting demand linked to iron ore operations, Kambalda East, near the Goldfields mining belt, followed at

12.2%, supported by nickel and gold activity.

Unit yields were even stronger, with South Hedland leading the country at 17.8%, while Newman recorded 14.3% and Pegs Creek recorded 13.2%, as apartment stock is limited

and worker demand remains consistent.

Pegs Creek, located in Karratha, recorded a 23.5% increase in house rents over the year and Rockhampton City recorded a 21.1% jump in unit rents.

Constraints to shape 2026

Market conditions are expected to be more restrained in 2026 as borrowing capacity, affordability and credit assessments place limitations on demand.

National listings remain 18% below the five-year average and new housing completions continue to trail household formation, maintaining the structural imbalance that supported

stronger conditions in 2025.

Owen said that imbalance alone is not enough to drive the same level of growth next year.

“Supply remains tight, but the demand environment is shifting. Inflation forecasts have been revised higher, interest rate expectations have adjusted with them, and households are

facing stricter borrowing assessments. Those factors can temper buyer activity even when stock levels are low,” she said.

“Lower value markets may still outperform because they carry less sensitivity to credit constraints, but overall growth is likely to be more measured compared with 2025.”

Key findings – Cotality Best of The Best (BoB) 2025

Lower-value suburbs delivered the strongest value gains, led by Kalbarri (WA), up 40.2% for houses, and Cranbrook (Qld), up 29.3% for units.

Sydney’s premium suburbs remained the country’s highest value markets, with Point Piper recording a house median of $17.3 million and unit median of more than $3.1

million.

Mosman recorded the highest total value of house sales nationally, with $1.58 billion transacted across 229 sales.

WA’s resource-linked towns produced the nation’s strongest rental yields, with Newman at 12.6% for houses and South Hedland at 17.8% for units.

Pegs Creek (WA) had the highest annual house rent increase at 23.5%, unit rents rose the highest in Rockhampton (QLD), up 21.1%.