Andrea Riquier of MarketWatch opened up the week with commentary from market analysts stating that “the coronavirus is sort of a dark irony helping out housing…It’s keeping rates down as global investors come piling into the U.S. but it’s not hurting our economy to the point where it’s costing us jobs.”
There will be pain among foreign buyers of U.S. real estate, according to Kathleen Howley of Housing Wire. The epidemic has China on near-lockdown, which means that purchasing activity into international markets like the U.S. will see a dramatic pullback. Chinese buyers were the top foreign purchasers of U.S. real estate over the last seven years—shout out to my Canadian peers who came in second.
This could be significant when you consider buyers from China purchased over $13 billion in U.S. property in 2019 alone, particularly in high-end luxury markets.
#PropTech confidence dips, still robust
MetaProp released its 2019 Year-End Global PropTech Confidence Index (submission required), showing that investor confidence in PropTech companies has fallen from 8.8 to 8 out of 10 in the second half of 2019. Confidence is still up from 7.7 in 2018.
Source: MetaProp
PropertyPortal Watch, among other news outlets, outlines that the drop in confidence is due in part to the failed WeWork IPO which has left investors more uncertain about these types of investments.
Ironically, WeWork isn’t a property technology company, it’s a co-working aggregator.
Graham Lanktree of Property Week comments on the report, noting that “Even though they have lower confidence, 86% of investors said the proptech companies currently in their portfolio are performing above expectations or meeting expectations for customer growth.”
Source: MetaProp
Digital mortgages
This past week saw some big moves in digital mortgages—a growing trend that is sure to upend the real estate industry. The friction involved legacy lending practices is ripe for disruption, and we are beginning to see this innovation take shape.
Alcynna Lloyd of Housing Wire reports that Black Knight and Quicken Loans have expanded their partnership after Black Knight purchased Quicken Loans Cyclops mortgage servicing customer relationship management software. Black Knight reportedly plans to integrate this its own servicing software and expand its offerings, making them more easily available digitally.
Similarly, in a Press Release this week, the national mortgage provider Envoy Mortgage, announced the launch of its digital mortgage solution, EnGen. “The platform aims to provide flexibility, transparency, speed and automation to provide consumers with a seamless and user-friendly online application experience.”
In other digital mortgage news, First American purchased Docutech for $350 million last week, paving the for the title insurance giant to move quickly to fully digital real estate closings.
Kelsey Ramírez of Housing Wire reports that the move to front-loading the origination and funding processes using predictive algorithms is the next big step in realizing fully digital mortgage products. Specifically, “currently, a person pre-qualifies for a mortgage amount and makes an offer on a home, and if the offer is accepted, then the actual mortgage/underwriting process begins. Access to more computational power, robust data and predictive analytics could allow this process to be “front-loaded” for a number of properties that a buyer is likely to make offers on, so that when a buyer “clicks” online to purchase a property, only the funding and final filings with the county recorder are left to complete.”
For an excellent discussion on the future of digital mortgages, see the MReport’s interview of Michael Farris, VP of Strategic Solutions for Origence, titled Hurdles, Challenges in Digitizing Mortgage Processes.
CoStar acquires RentPath
CoStar made big news last week with their acquisition of RentPath, owner of rent.com, apartmentguide.com, and rentals.com, among other significant real estate web properties. These websites receive over 21 million visits per month and are a standard tool in our investor toolbelt.
According to CoStar CEO Andrew Florance, “RentPath was burdened with a heavy debt load that prevented the company from making the necessary investments in building brand recognition and generating traffic from Google. As the cost of Google traffic soared, RentPath was unable to keep pace.”
According to Jessica Saunders of the Atlanta Business Chronicle, RentPath said CoStar “will serve as the “stalking horse bidder” in a court-supervised auction and sale process. The proposed transaction with CoStar is subject to higher or otherwise better offers, it said. If other qualified bids are submitted, RentPath will conduct an auction. RentPath said it will continue normal operations throughout the process, including ongoing work to increase consumer traffic and grow new business segments.”
Peter Grant of The Wall Street Journal (subscription required) notes that CoStar deal shows it is pushing deeper into the growing online apartment hunting business. Further, this all-cash deal comes after RentPath struggled financially as it seeks to restructure over $650 million in debt.
