The iBuying model is predicated on the assumption that a firm or a group of investors can find value in a given market, and through marginal investment (fixing what's broken or outdated) can extract that value by selling for a higher price. In that process, investors can and have leveraged cash as a negotiation tactic, offering less than comparable properties in exchange for speed and ease to buyers who either had a lot of equity and/or were in a hurry.
These assumptions work very well in an up-market, where the rising tide lifts all boats (houses). The real test for iBuyers is a market downturn, when properties which were acquired at a high price no longer command those lofty prices, and when operating costs (taxes, utilities, etc) start to pile up. As we've seen this past year in the case of several well-known companies that existed the iBuying model, a market downturn can wreak havoc on the best-designed models.
In answer to your question, yes, iBuying can impact a local market, especially if investors buy a large share of homes in a given geography. The activity can drive prices higher and make it challenging for individuals or families to get a foot in the door at a more affordable price.
I see equity investor participation (large funds with available cash) in housing to continue in the future, as long as return remain attractive. At the same time, I see a smaller number of strict iBuying transactions taking place. - George