What We're Reading
T3 Insight Monthly Digest Readings
- Reading for: December 2020
- From: Freddie Mac
- Summary
30-year fixed-rate mortgage rates dropped to 2.71 percent for the week ended December 3, and 15-year fixed to 2.26 percent, marking yet another record low, nearly the lowest in half a century.
- Commentary
While mortgage rates remain at all-time lows, house prices have continued to rise as inventory across the U.S. is low. Rates likely will not drop much lower if at all, so buyers remain active and refinances common. A more balanced market will likely emerge when Covid-19 uncertainty settles.
- Reading for: December 2020
- From: Vendor Alley
- Summary
W+R Studios, makers of the popular comparative market analysis Cloud CMA, Cloud Agent Suite and many other industry tools, has been acquired by Lone Wolf Technologies.
- Commentary
Founders Greg Robertson and Dan Woolley believe merging with a larger tech company is a good move given real estate’s increasingly higher financial and tech stakes. Since company founder Lorne Wallace sold his interest in the company in 2015, Lone Wolf acquired zipLogix in 2019 while its institutional investor Stone Point Capital bought out fellow investor Vista Equity Partners just last month. The residential real estate technology space is undergoing significant consolidation – Constellation has already acquired some 20 brands, MoxiWorks acquired Imprev last year and now there are even talks about giant CoreLogic fending of acquisition interest from credible players.
- Reading for: December 2020
- From: NAR
- Summary
Sales, and prices, of existing homes continue to rise throughout the U.S., as the real estate market sustains its comeback after the Covid-19 freeze in spring. Sales in October jumped 4.3 percent from September and 26.6 percent from a year ago, while median prices jumped to an all-time high of $313,000.
- Commentary
The real estate market continues to be blazing hot, which gives real estate brokers and agents ample opportunity to invest, innovate and grow their businesses into 2021. While uncertainty looms, the bold have immense opportunities.
- Reading for: December 2020
- From: Crunchbase
- Summary
Just four months after raising $150 million, home insurance startup Hippo, which insures homeowners’ homes and their possessions as well as helping them manage them digitally, comes back for $350 million more at a valuation of $1.5 billion.
- Commentary
The residential real estate brokerage ancillary business space remains a huge opportunity as these services represent a critical component to the end-to-end home transaction. Many large brokerage companies are pursuing the incorporation of ancillary services and, if you haven’t yet done so, take the first step in 2021.
- Reading for: December 2020
- From: HousingWire
- Summary
HW Media will now own and operate media brands HousingWire, FinLedger and Real Trends. The company will reach over 11 million real estate, mortgage and fintech professionals each year. Steve Murray will continue consulting work under a separate company.
- Commentary
HousingWire, already a respected media name in housing, construction, and mortgage news, now expands its news, rankings and events capabilities into residential real estate brokerage. Inman, the residential real estate brokerage industry’s leading media company, has a strong, new formidable competitor.
- Reading for: December 2020
- From: Yahoo Finance
- Summary
On December 21, Opendoor will begin trading on the Nasdaq stock exchange under the “OPEN” ticker.
- Commentary
The move to Nasdaq trading brings yet another public company to the real estate fold. It also will now allow more transparency into the iBuyer business model, providing an accurate, real-time look at the model’s evolution and its financial challenges and successes.
- Reading for: November 2020
- From: Inman
- Summary
Zillow Group has appointed Claire Cormier Thielke to its board of directors. She is the company’s first Black board member. In September, Zillow pledged to increase diversity on its board.
- Commentary
2020 has presented many challenges, but a renewed focus on increasing diversity is one bright spot. We expect to see similar moves by other companies in the real estate space, including T3 Sixty’s own Real Estate Apprentice, which aims to help increase diversity in the real estate profession.
- Reading for: November 2020
- From: GeekWire
- Summary
Greg Schwartz and Carey Armstrong, former chief business officer and former vice president at Zillow Group, respectively, have raised $40 million for a new agent- and consumer-focused mortgage and transaction startup, Tomo Networks. They have yet to reveal the business model.
- Commentary
Startups and incumbents have been making an all-out effort to streamline the transaction in recent years. One of the chief hurdles involves stitching together the processes ancillary to the transaction – such as mortgage, title and insurance — which has spurred a bunch of innovation, including iBuyers and startups like Tomo and larger players like Zillow Group and Opendoor. A true digitized transaction, from start to finish, is still years away, but the hunt is on in earnest now.
- Reading for: November 2020
- From: Bloomberg
- Summary
Two of CoreLogic’s investors looking to take the company over decided to stand down given that the price had gone too high. Two other potential buyers are still negotiating a purchase of the company, whose current market cap stands at approximately $6 billion
- Commentary
First American Financial spun off its technology and information division in 2010, creating CoreLogic. Listed on the New York Stock Exchange under the CLGX ticker, CoreLogic is a multibillion dollar financial, property, and consumer information, analytics, and business intelligence company. Matrix, its MLS software, is the most-used MLS platform in the U.S. with 850,000 users. With continued consolidation, class-action lawsuits and the Clear Cooperation Policy, the MLS industry itself is also undergoing a reengineering.
- Reading for: November 2020
- From: Inman
- Summary
Los Angeles-based luxury brokerage, The Agency, the nation’s 25th largest brokerage by 2019 sales volume, continues its national expansion by expanding to Washington, D.C. by bringing on a 30-agent former RE/MAX brokerage.
- Commentary
A strong real estate market fuels opportunities for all brokerages with strong leadership and an appetite for growth. We expect to see more expansion and consolidation efforts in the months and year to come.
- Reading for: November 2020
- From: Realogy
- Summary
Realogy reported a net income of $98 million in the third quarter, a huge year-over-year jump from the $112 million it lost in the third quarter 2019. Realogy generated revenue of $1.9 billion, an increase of 20 percent, or $307 million, year over year.
- Commentary
Aided by a strong performance in its ancillary business, as well as a blazing hot third quarter across the board in real estate, Realogy’s restructuring efforts seem to be paying off. See the detailed Realogy analysis in the “2021 Swanepoel Trends Report” out December 7. Order a copy here.
- Reading for: November 2020
- From: Zillow Group
- Summary
Zillow posted $40 million in net profits in the third quarter, the first profitable quarter for the company since 2017. Its total consolidated revenue for the quarter was $657 million.
- Commentary
The hot third quarter in real estate helped buoy Zillow’s performance, as did a slow ramp-up of its cash-intensive iBuying program Zillow Offers.
- Reading for: November 2020
- From: Realtor Magazine
- Summary
On November 18, NAR unveiled a virtual simulation, fairhaven.realtor, to help Realtors more easily recognize discrimination in their work. The simulation will guide agents through a transaction and educates them on fair housing practices.
- Commentary
This is one of the first announcements by NAR as part of its commitment to improve diversity in the residential real estate brokerage industry. More expected in the not-too-distant future.
- Reading for: October 2020
- From: TechCrunch
- Summary
Opendoor goes public by merging with a so-called “blank-check company” or a special purpose acquisition company (SPAC). The SPAC, Social Capital Hedosophia II, which is associated with mega-investor Chamath Palihapitiya, invested over a $1 billion in Opendoor through the deal, which values Opendoor at $4.8 billion.
- Commentary
This version of IPO, termed “IPO 2.0” by some, represents an increasingly popular way for growing companies to go public without the scrutiny that comes with a months-long road show in a traditional IPO. With six-year-old Opendoor’s jump to public trading on the NASDAQ stock exchange, real estate has yet another public company.
- Reading for: October 2020
- From: The Real Deal
- Summary
In September, Zillow announced that it will hire in-house agents and take IDX feeds from MLSs to service its iBuying Zillow Offers wing starting in January 2021. The company will start in three markets, Atlanta, Phoenix and Tucson, and then expand from there.
- Commentary
The iBuying business model continues to evolve, and one of the nation’s largest, most powerful brokerage companies jumps into brokerage in an effort to make it profitable. Expect new marketing and advertising to give this momentum an added boost.
- Reading for: October 2020
- From: Broker Public Portal
- Summary
The industry initiative that advocates for display of listings on portals that prominently features listing agents’ names and contact information, among other “fair display” items, has a new lead in Joe Rand, the chief creative officer at Better Homes and Gardens Rand Realty, which Howard Hanna just acquired in late September.
- Commentary
The Broker Public Portal and its official website Homesnap have made some strides in recent years to become a popular consumer real estate destination but has struggled to gain the prominence it hoped. The popular, smart Rand gives the initiative a shot in the arm.
- Reading for: October 2020
- From: Bloomberg
- Summary
Sales of existing homes jumped 8.8 percent in August from July, according to NAR stats. The association attributes the sustained increase to low mortgage rates, which have stoked buyer demand even amid the pandemic.
- Commentary
Real estate has roared into the third quarter with no signs of slowing down. The Federal Reserve has pushed mortgage rates to all-time lows, below 3.0 percent on 30-year fixed-rate mortgages. This appears to have buoyed the real estate market. Rates will likely not go lower, so maybe it’s enough to hold the market while the rest of the economy recovers.
- Reading for: October 2020
- From: Howard Hanna
- Summary
Howard Hanna, the nation’s seventh-largest brokerage by 2019 sales volume, has scooped up another brokerage, this time, BHGRE Rand Realty, the nation’s 107th largest brokerage based on its 2019 sales volume of $2.3 billion, according to the 2020 Real Estate Almanac.
- Commentary
As the industry continues to mature, the big get bigger. This years’ long trend in the making continues with this acquisition. Look for others in 2020 and 2021.
- Reading for: October 2020
- From: The Real Deal
- Summary
Zillow Group alums Spencer Rascoff and Austin Allison, former CEO (and former dotloop founder) respectively, have teamed up to launch a startup that helps homeowners acquire equity in a second home with Pacaso. Rascoff serves as chairman and Allison as CEO.
- Commentary
This addition to the real estate startup space from startup vets reveals just how much white space remains in the industry for innovation.
- Reading for: October 2020
- From: Inman
- Summary
The large antitrust class-action lawsuit filed on behalf of homeowners against NAR and large brokerage defendants continues after a judge dismissed NAR’s motion to dismiss it in early October.
- Commentary
This lawsuit and those related to it loom as potentially large change-agents in the industry. As chronicled in the 2020 Swanepoel Trends Report chapter on the subject, the lawsuits could change how buyer’s agents are compensated. However, any direction or certainty is still years away.
- Reading for: October 2020
- From: The Real Deal
- Summary
With the acquisition of title startup Modus, Compass dives deeper into ancillary business, something its large brokerage counterparts have developed and relied on for years to maximize and diversify their revenue.
- Commentary
Ancillary business gives traditional brokerages access to valuable revenue streams that tie into their core real estate transaction models. Compass, like many other newer brokerage companies, says it is building an end-to-end real estate platform, which Modus will play a part in.
- Reading for: October 2020
- From: Keller Williams Realty
- Summary
Gary Keller, who has led Keller Williams Realty in his second stint as CEO since January 2019, and become executive chairman of a new holding company KWx, which is the new parent company for Keller Williams Realty, Keller Williams Worldwide, Keller Mortgage, Keller Covered and Keller Offers. Carl Liebert, becomes the new CEO of KWx.
- Commentary
This corporate organization changes little in the day-to-day operation. Josh Team and William Soteroff, respectively, remain president of Keller Williams Realty, Inc. (USA operations) and Keller Williams Worldwide, KW’s international division.
Liebert, however, is a game-changer. He brings more than 30 years of experience leading customer-driven transformations and developing strategic, operational and process excellence within retail (AutoNation, 24 Hour Fitness, The Home Depot, Circuit City), financial services (USAA), and industrial (General Electric) organizations and is the first executive of this caliber to join KW. A public offering in the coming years now looks like a very viable probability.
- Reading for: September 2020
- From: The Real Deal
- Summary
When Bill de Blasio became mayor of New York in 2014 in the midst of a protracted rise in the city’s population, he often spoke of its inevitable climb to 9 million. Then the unexpected happened: It peaked in 2016 shy of 8.5 million and fell for three straight years by a total of 132,000. When the pandemic hit, some 420,000 fled. A July survey found two in five New Yorkers would leave if they could. The departures that have occurred are pushing apartment rents down, especially in Manhattan, where the vacancy rate has doubled to more than 5 percent. Sublease space is flooding the office market, landlords are offering concessions and retail tenants are trying to get out of pricey leases.
- Commentary
The largest city in the United States is certainly not bulletproof and has recently had to deal with a significant number of challenges including excessive traffic, limited space, delivering clean water, global warming and the pandemic. Now, a growing number of people want to live elsewhere.
- Reading for: September 2020
- From: The Salt Lake Tribune
- Summary
“June and July were, frankly, nuts,” said Alicia Holdaway, president of the Salt Lake Board of Realtors. Homes sales along the Wasatch Front and in other pockets of the state have rebounded dramatically after what proved to be a milder-than-expected slowdown as the coronavirus first took hold in the spring. This is a market bounce with the potential to buoy Utah’s economy, driven in part by people who can now work from anywhere and those looking to get closer to nature. It’s also driven by historically low interest rates and Utah’s best-in-country unemployment rate.
- Commentary
This article features Utah, but merely represents one example of a similar story playing out in communities across the country. The housing market is firing on all cylinders across the country.
- Reading for: September 2020
- From: CNBC
- Summary
Designed to address some of the additional risk that comes from lending during Covid-19, Fannie Mae and Freddie Mac have implemented a 0.5 percent fee lenders must pay on mortgage refinances beginning in September. That comes to an additional $1,400 fee for the average refinance loan.
- Commentary
The real estate industry has been blazing hot in the third quarter, thanks in large part to record-low mortgage rates. This additional refinance fee may slow some of the refinance activity, but not drastically.
- Reading for: September 2020
- From: New York Times
- Summary
In this opinion piece, the author provides some stats and stories to suggest that improving racial equality in America would be greatly helped by understanding and dismantling the segregation that exist in many of its communities.
- Commentary
This story, once again, points to the central role the real estate industry has to play in addressing and improving the racial divide in America.
- Reading for: September 2020
- From: Crunchbase
- Summary
The agent-matching startup, and relatively new iFunder, HomeLight has acquired Disclosures.io, another startup that focuses on delivering deep information on homes to buyers before they make offers. With the acquisition, HomeLight says it begin offering listing management services.
- Commentary
HomeLight represents one of many new business models looking to build out the components of an end-to-end residential real estate transaction.
- Reading for: September 2020
- From: Inman
- Summary
NAR and three large MLSs responded to a May 28 complaint from a California-based pocket listing service alleging the organizations violated antitrust laws with the implementation of the Clear Cooperation Policy this year. The defendants filed a motion to dismiss the suit arguing that the policy is meant to help consumers and protect competition.
- Commentary
The Clear Cooperation Policy represents a significant development in the industry this year. The policy effectively maintains MLSs as the central repository of listings, which reinforces the residential real estate brokerage’s unique cooperative framework.
- Reading for: September 2020
- From: Newsday
- Summary
On September 17, the New York State Senate will continue to investigate housing discrimination in response the Newsday’s “Long Island Divided” series by summoning agents and brokers who failed to respond to a request to testify at a hearing in December.
- Commentary
Housing, neighborhoods and real estate play an integral role in America’s challenges with improving diversity. Increasing the residential real estate industry’s diversity, including in its leadership ranks, will be a significant step in improving equality in the nation.
- Reading for: September 2020
- From: This American Life
- Summary
In this podcast episode, two stories highlight the nuance and challenge of addressing inequalities. As a quote from the first of the two stories goes, “Treating different things the same can generate as much an inequality as treating the same things differently.”
- Commentary
Addressing inequality in the US and in the residential real estate brokerage industry presents an immense challenge. It requires proactive action, careful, diligent thought and an honest evaluation of current actions. That’s one reason T3 Sixty established a new diversity consulting division, to assist clients in dealing with these complex issues.
- Reading for: September 2020
- From: Job Board
- Summary
Opendoor, as a number of other iBuyers have done in the wake of the pandemic, has begun to shift operations and look more and more like a standard brokerage. In this job posting, the company is looking to hire independent contractor agents.
- Commentary
Opendoor already had in-house employee agents. This move represents likely another test by the iBuyer in refining its model into something sustainable and profitable.
- Reading for: September 2020
- From: NPR
- Summary
As remote work gains traction, so-called “Zoom towns” – often remote locations that offer a great quality of life – are seeing increased demand from homebuyers.
- Commentary
The lasting impact of Covid-19 on American society and population concentration will not be fully realized for years to come, but it appears increasingly likely that a significant portion of city residents will move – or spend much more time in – towns farther afield.
- Reading for: August 2020
- From: Inman
- Summary
Zillow’s weekly market survey report in mid-July revealed that homes sold an average of just 20 days after hitting the market, the shortest ever recorded by the company.
- Commentary
Extremely low housing inventory, and a new set of buyer wants, are contributing to a hot real estate market.
- Reading for: August 2020
- From: GlobeNewswire
- Summary
EXp World Holdings, the parent company of eXp Realty and VirBELA, acquired the assets of Showcase IDX, a real estate search technology company that helps agents market and grow their businesses and online presence. Showcase IDX’s services include property search for online and mobile platforms, lead generation, state-of-the-art mapping, and CRM tools and integrations.
- Commentary
Cloud-based brokerage eXp Realty continues to show impressive growth; it recently surpassed 32,000 agents in its four-country footprint. The stock price recently surged on record second quarter earnings, pushing the company’s market cap above $2 billion. It is now among the nation’s most valuable real estate companies; by comparison, other publicly held real estate companies had the following market caps in mid-August: Realogy $1.2 billion. Re/MAX $0.7 billion and Redfin $4.3 billion.
- Reading for: August 2020
- From: The Real Deal
- Summary
Harris’s believes “housing is a human right.” In November 2019, she and Rep. Maxine Waters introduced a bill that would result in over $100 billion in affordable housing investments, including $10 billion to ease or eliminate zoning requirements. She also stated she would pass legislation to provide a tax credit for renters spending over 30 percent of their income on rent and utilities, the level at which tenants are considered rent burdened.
- Commentary
The article shares some other real estate-related activities. As the newly selected vice-presidential nominee on the Democratic presidential Biden-Harris ticket, we will learn much more about her positions on real estate and Realtor-related issues. Harris is the nation’s first Black female vice-presidential candidate.
- Reading for: August 2020
- From: Crunchbase
- Summary
The Palo Alto-based insurtech startup Hippo has raised a total of $359 million since its 2015 inception, the latest at $1.5 billion valuation. The company uses smart home tech to help evaluate homes and a digital process to onboard new clients.
- Commentary
Many elements of the residential real estate industry are experiencing an influx of capital from investors and entrepreneurs attempting to improve the real estate transaction. In this instance, Hippo allows homeowners to get a quote and obtain home insurance online in 60 seconds or less, claiming to save buyers up to 25 percent compared to traditional insurers.
- Reading for: August 2020
- From: Redfin
- Summary
Redfin reports that 19.9 percent of the winning offers its agents won in June waived inspection contingencies, up from 13.2 percent from a year ago. Similarly, 20.6 percent of Redfin’s winning offers waived appraisal contingencies, up from 17.4 percent a year ago.
- Commentary
The market continues to favor sellers as inventory remains low in many areas. Buyers must increasingly take more aggressive measures to get the homes they want to purchase. Of course, this demand also translates into a steady rise in home prices.
- Reading for: August 2020
- From: The Real Deal
- Summary
Realogy has settled its lawsuit over the aborted $400 million sale of its relocation business after Sirva and MDP backed out of the transaction in April, claiming that the pandemic had a “devastating” impact on Cartus.
- Commentary
The canceled sale appears to have had no negative impact on the Cartus business and, for most of its real estate partners, it remains business as normal. Realogy has confirmed that relocation continues as a key part of its business model.
- Reading for: August 2020
- From: GeekWire
- Summary
In late July, Zillow Group announced that it had extended the option to work from home, at least part-time, to approximately 90 percent of its over 5,000 employees indefinitely. The company also reported it onboarded 500 employees completely virtually since the pandemic began.
- Commentary
Zillow Group, one of the industry’s largest employers, reveals how the pandemic may leave a lasting impact on the reduction of office space. We believe many real estate companies are revisiting their leases and will decrease their office footprints in the coming months and years.
- Reading for: August 2020
- From: New York Times
- Summary
In the second quarter, despite the trillions of dollars the government pumped in to support the economy, the U.S.’s GDP still dropped 9.5 percent, The Times chronicles how communities and businesses are struggling across the country.
- Commentary
With billions in lost revenue, subsequent layoffs and a growing number of bankruptcies, almost no industry has gone unscathed, with hospitality, restaurants, airlines, movies, sports and retail among the worst hit. The pandemic has impacted all segments of the population with the elderly, those living in people poverty and people with disabilities most impacted. Sadly, the number of infections in various areas have begun to spike again making the road to recovery long and arduous.