Despite The Pandemic’s Impact On Real Estate, Proptech Is Thriving

We all know SPACs are hot -- in 2020, SPAC activity exploded by four times that of 2019.

What’s interesting, however, is how much activity has targeted real estate and proptech, even in light of the pandemic. Take Opendoor’s merger last fall, for one, or in December – and Doma (formerly States Title) being one of the latest to jump on the SPAC train by announcing their $3B deal last month. Overall investment in proptech hit a record high in 2019, and even with a nearly quarter decrease in global venture capital funding in 2020, the year closed with $23.75B invested in proptech.

The takeaway? Even with COVID-19’s impact on real estate, proptech is here to stay, arguably outgrowing its long-time parent fintech and moving into a place of its own. Here are some of the takeaways from the past year:

Buy or Rent Finances are Part of One’s Larger Financial Picture
Even with the notable decrease of rents in some of the country’s most expensive metropolitan areas at the height of the pandemic, destination cities are still around 10-15% more expensive than a year ago, with home prices rising at their fastest pace since 2006. Meanwhile, income hasn’t kept up. Household income in the U.S. has risen 13% since February 2020, mostly a result of federal assistance during the pandemic, and historically wage growth has been creepingly slow (especially in regards to the racial and gender wage gaps).

That’s where proptech startups come in – there is an increasing opportunity to rethink how real estate is transacted and consumed. For example, new financing models are gaining popularity, such as rent-to-own or equity-based financing with more startups such as Landis emerging and frontrunners like ZeroDown and Divvy leading the way (Divvy announced their $110M Series C this past January). Additionally, startups such as HomeZada are re-envisioning the home as an asset by providing consumers a more holistic view of their home finances and expenses.

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