The property market landscape is changing according to a new report from CoreLogic, as 30-year mortgage rates reached their highest levels in two decades, while experts predict the pandemic-driven widespread move to digital solutions is a change that is likely here to stay. Along with these market shifts, much of what has been familiar in the homebuying and selling processes for generations is being remodeled.
One area of the real estate industry that is getting a particularly large overhaul is the homebuying and financing space with the emergence of iBuyers (instant buyers) and other related PropTech technologies. IBuying allows homeowners to quickly sell their properties online for all cash, typically to large, deep-pocketed investors and corporations.
In 2021, venture capital investment into real estate tech reached a record-breaking $32 billion, a 28% increase in funding since 2020, according to The Center for Real Estate Technology & Innovation (CRETI). Much of this funding landed with companies that provide iBuying and bridge financing solutions – two approaches to the homebuying process that prioritize certainty of transaction completion for buyers and sellers while also adding additional efficiencies to a process that has many contingencies and much uncertainty built in.
“These PropTechs are trying to bring venture capital technology to the consumer to give them choice and flexibility as to how they either find a house, buy a house or protect the house,” said CoreLogic’s real estate tech solutions expert Mark Weaver.
Will the Cooling Housing Market Affect iBuyers?
IBuyers are not a new phenomenon in the real estate space. They are, however, an option that has gained popularity in the last two years as market dynamics encouraged quick transactions.
But as the housing market begins to cool, the long-term success of market-leading companies such as OpenDoor and OfferPad is predicated on the accuracy and reliability of their data.