This isn’t to say that the residential real estate market has remained stagnant. In fact, as employers and employees moved out of cities and into their suburbs in search of more space and quiet, activity in the residential space has drastically increased as well. The residential real estate market has helped spur on proptech’s 2021 boom. In August, Divvy Homes, whose rent-to-own model seeks to make homeownership more accessible, raised $200 million at a $2 billion valuation, just six months after its previous round of $110 million at a $490M post-money valuation, according to PitchBook. Divvy’s funding and growth follows a homebuying boom in the U.S. spurred by low mortgage interest rates since the start of the pandemic. Existing home sales rose 0.8% in October to a seasonally adjusted annual rate of 6.34 million, down from 6.73 million in October 2020 but still well above pre-pandemic levels.
Divvy is among a growing list of unicorns and public tech companies seeking to disrupt residential real estate. Online brokerages and marketplaces like OpenDoor, Redfin, Compass and Zillow have democratized access to real estate data while introducing new tools aimed at increasing the speed of transactions. Meanwhile, companies like Compass (which IPO’d in April 2021) and Place, which raised $100 million at a $1B post-money valuation in November, are changing the traditional homebuying process by giving agents more operating leverage, transparency and agility. As those digital models increase in popularity, the disruptors of residential real estate are leading buyers and agents alike to question the value provided by traditional brokerages, all the while shifting the balance of power toward the consumer.