Real estate tech company REX is expanding into home closing by tapping digital closing platform Qualia to power its title and escrow operations.
According to its release, the partnership will enable REX users to monitor the closing process through an automated escrow system which sends updates and tasks for both parties to complete – streamlining the escrow and closing process.
“The home closing process has traditionally been one of the most complicated, confusing, paper-laden parts of the home buying experience,” Qualia CEO Nate Baker said. “We’re proud to support high growth real estate technology companies like REX to provide homebuyers and sellers with a transparent, easy-to-understand, and fully digital real estate closing experience.”
REX also said that the electronic delivery of closing packages to clients and notaries, and final title policies and recorded mortgages to lender partners are now also possible.
“At REX, we’re focused on reimagining the entire home buying and selling process, simplifying it so that all services are under one roof, and offering savings as a result. We’re excited to have found a partner in Qualia that shares the same goal of a streamlined transaction,” said Lynley Sides, president and chief operations officer of REX. “The partnership represents another addition to REX’s suite of services for home buyers and sellers.”
iBuying companies are experiencing a slump in sales during a time when many thought the opposite might happen, as they provide a contactless way to sell a home.
Opendoor, the biggest iBuying company, has seen its revenue fall by almost half in the past year, and said it doesn’t expect its business to recover properly until mid-2022, according to the Wall Street Journal.
When the COVID-19 pandemic emerged last spring, most iBuyers, which buy and resell homes electronically, halted their businesses. By summer, they had come back online and resumed making instant cash offers to people who wanted to bypass the traditional homeselling process.
But it seems the high demand for homes from a flood of buyers enticed by the pandemic into making a move has worked against iBuyers. Selling on the open market is more appealing as the high demand means most can fetch good prices for their homes, and they don’t have to wait long to do so. Most iBuyers offer prices that are below market value with the promise of a fast sale, but that is no longer such an enticing prospect.
Opendoor, which launched its business in 2014, is still the leader in the iBuying space, but it is facing challenges from numerous competitors, such as RedfinNow and Zillow Offers. While the company’s revenue surged 158% to $4.7 billion in 2019, Opendoor cut more than a third of its workforce in April 2020 due to economic hardship during the pandemic.
Opendoor has responded by expanding its business model to include escrow, title and other services.
iBuyers have managed to sell a large number of their home portfolios during the pandemic. Opendoor said it sold 80% of its housing stock in the first six months of last year. But that has meant rivals have been able to gain a bigger market share.
Still, Opendoor insists that other iBuyers aren’t its primary competitors, seeing traditional brokerages as its main rivals instead.
Zillow has said that it expects the for-sale housing market to gain even more strength in 2021 following an incredible run that came in the wake of the coronavirus pandemic.
Zillow said in its 2021 housing predictions that demand is continuing to grow as we enter the new year, and that this will likely surge ahead even faster in urban areas as economies start to reopen. Indeed, Zillow says that annual home sales growth will hit its highest level in almost 40 years as more financial certainty brings more sellers onto the market to cash in on the growing demand and technology makes it easier to connect with buyers.
On the downside, Zillow forecasts home price, mortgage rate and rent increases that will pose more challenges around affordability to those with less financial resources.
Demand for city living will surge in 2021
Demand for urban housing largely kept pace with the suburbs in 2020. But rent prices in urban areas softened compared to their suburban counterparts in the spring and summer as a shift in housing needs and the spike in service-sector unemployment left their mark. While it’s not quite right to call it a comeback, Zillow expects demand for city living to surge in 2021.
Some of the nearly 3 million adults who moved in with parents or grandparents in the spring have already started to move back out while taking advantage of an increase in rent concessions. With COVID-19 vaccine distribution underway, Zillow expects many of those who may have left cities temporarily during the pandemic are likely to return as local economies begin to open up, and a new class of young adults will be drawn to cities as they finish school and enter the job market. Urban rental demand is likely to be boosted by the relatively soft price growth this year, easing affordability challenges, at least temporarily.
The next home shopping season will be the hottest in recent memory
Zillow expects a perfect storm of market conditions to create the hottest spring shopping season in recent memory, with sales happening quickly and often above list price. It’s likely COVID-19 vaccine distribution will be well underway in the U.S. by the spring, and local economies and schools should be in the process of opening back up. Many will also have more certainty about whether their jobs will be performed remotely in the long term, adding buyers to the market who had been waiting for that to be settled. Add in expectations for mortgage rates to rise later in the year, and we could see a buyer frenzy as they look to lock in rates as low as possible.
It could also be the last of its kind
Springtime has historically been the best time to list a home for sale, but homes have continued to sell quickly through the fall and into the winter this year in what could be the end of the typical seasonal trend. The increased adoption of real estate technology has given home buyers more tools to shop from the comfort of their home, which can be done just as easily during the warmer spring and summer months as it can in the dead of winter. That’s likely to lessen the traditional seasonality of home shopping as it reduces the impact inclement weather can have on things like in-person showings and open houses.
Home sales growth will be biggest since the ’80s
2020 has been a remarkably strong year for the housing market, with sales on pace to grow 6% from 2019 despite essentially pressing ‘pause’ for a few weeks in the heart of the spring shopping season. Zillow expects that mark will be shattered next year, forecasting 21.9% annual growth for a total of 6.9 million homes sold. That would be the biggest annual sales growth since 1983i.
The optimistic outlook is due largely to the enduring strength of the market today, even through what is typically a slower season for home sales, and demographic factors that indicate demand will remain strong for years to come. Plus, about a third of homeowners considering selling in the next three years cited life and financial uncertainty as reasons they weren’t selling this fall. The COVID-19 vaccine rollout and expected subsequent economic recovery should pull many off the sidelines, adding more inventory to meet the heavy demand for homes and thus creating more transactions.
Moving will be a digital-first experience
Zillow predicts increased adoption of new and existing technologies during the pandemic will make a digital-first experience the new standard for real estate in 2021 and beyond, helping to increase the pace of transactions. These innovations can connect sellers with interested buyers more quickly, keeping inventory from stockpiling to the same degree it has in the past.
Take the home shopping experience: Innovations like 3D Home tours paired with interactive floor plans and virtual tours are allowing shoppers to winnow down their options without leaving their couch — requests for virtual tours tripled when stay-at-home orders began this spring. When it comes time to tour a home in person, self-tour technology allows shoppers to tour a vacant Zillow-owned home on their own schedule — no more waiting for the weekend to visit open houses. And nearly two-thirds of Zillow Offers home purchases are closed digitally with a remote notary, one more convenience over the traditional home buying process.
Renters are also expected to use pandemic-accelerated technology to search, find, apply for, and lease a home all digitally in a safer, easier, end-to-end online transaction. Nearly half (46%) of renters agree that they wish more listings offered virtual tours — since March, multifamily rental listings with a Zillow 3D Home tour have attracted 18% more visitors than those without on Zillow — and 46% of renters surveyed would prefer to sign a lease online.
Fixing housing vulnerability will become high priority as rent prices rise
The expected surge in demand for rentals, which are more common near city centers, is expected to bring big price increases and fewer concessions from landlords. That will put many renters in a tenuous financial position after they were hit hard by pandemic-related income loss.
The rental market softened in 2020, with rents about flat nationally. In large metropolitan areas like New York, Boston and San Francisco, rents dropped for the first time in recent memory. Still, given the impact of shutdowns and layoffs on renter households, government assistance proved vital in keeping many afloat financially. Moody’s Analytics estimates nearly 12 million renters will owe an average of $5,850 in back rent by January 2021, shining a spotlight on the need for eviction protections or increased cash flow for renter households, whether in the form of employment income or federal stimulus payments to avoid a painful wave of evictions.
Homes will become increasingly unaffordable for low income families
Mortgage payments have become more affordable for homeowners over the past two years thanks to ultra-low mortgage rates. Zillow expects rapid price growth and slightly higher mortgage rates to reverse that trend in 2021, so buyers contemplating a move may consider doing so sooner rather than later.
Given the expected volume of sales, hopes for an economic recovery as the COVID-19 vaccine rolls out, and the expectations for demand to continue to outpace supply, Zillow forecasts annual home value growth to reach 10.3% in November 2021 — the highest since 2006. Mortgage rates, which hit record lows in 2020, are expected to rise. Rates are likely to remain low by historical standards and not rise enough to meaningfully limit demand, but even a small increase would affect buyers’ monthly payments.
Combined, that will make homes harder to afford, especially for first-time buyers who don’t have access to funds from the sale of their current home.
A recent Q & A we had with Adam Segal, CEO + Founder of Washington D.C. based Cove offers a picture window into the future of business. What was intended to be a real estate technology informative, turned out to be a glimpse of what the post-COVID world of real estate may look like. Initially focused on creating a network of co-working spaces to foster efficiency and productivity in the digital age, Segal’s company’s ship may have just arrived in the form of a world cataclysm.
The coronavirus pandemic is forcing a paradigm shift for every business and institution on Earth. The world is turned upsidedown, and the only sure thing people can cling to, for the moment, is uncertainty. The daily grind, the 9-5, in contrast to the homogenization of the digital and the physical world, is creating catastrophes and vast opportunities for the future. And Cove sits smack in the middle of what most experts think will be the transition of transitions not just in real estate, but for business in general. I exchanged emails with the Cove CEO this past week, since catching up with him via phone proved impossible. Here’s the brief interview, followed by some takeaway points.
RealtyBiz: How do you see commercial property marketing shaping up in the post-COVID era?
Adam Segal: At Cove, we believe commercial real estate will still have a place in a post-COVID era. In fact, it will transform from a place for your dedicated desk into an absolute key business resource to define culture and engagement. Traditionally, there has been a strong emphasis on your everyday desk or office. Moving forward, companies will consider where and how people are most productive, thereby enabling employees greater flexibility to choose when and where they work. The office will morph into a place to come together as opposed to being the required 9-5, everyday solution. For employees, this is an incredibly exciting future — as soon as you are no longer tied to a single desk or office, you have the freedom to design your life without your employer’s office location and long commutes as the deciding factor. At Cove, we provide the technology and service to support that future world for companies, while empowering office building owners a partner to create modern experiences integral to the future of work.
RealtyBiz: Some experts see the negative pricing trend for commercial property continuing to spiral downward. What is your view on this trend, and how can owners/developers prepare?
Adam Segal: When there is an increase in demand, differentiation becomes the absolute key. For those assets that are able to capture the future of work and unlock a differentiated experience, there will not be a downward spiral — in fact, just the opposite.
RealtyBiz: How do you see your business at Cove changing to address this new landscape?
Adam Segal: Cove implements a modern consumer approach to the future of work for companies and owners of office buildings. Our focus is on building an experience around the office by building robust tools to bring everything online — from scheduling and coordinating your team to reduce capacity, unlocking onsite services and delivery, real-time updates — really a gateway to a modern work experience. The post-pandemic office will look nothing like the office of yesterday. In the future, the office will no longer be a home for your desk. Instead, the office will be a resource to bring people together for meaningful engagement. As a result, every company will need more intentional and coordinated office days for collaboration. The future of work for any company will include a mix of working remotely, in office, on travel — but now a real focus on productivity as opposed to a default 9-5, Monday through Friday culture.
According to Crunchbase, Cove is funded by Early Light Ventures. My takeaway on their investment, given the current state of transformation in business, is that those investors are smiling great big about now. $8.4 million in total funding could well turn into 100 times that figure. Here’s why.
Whatever benefits the remote office had before COVID-19, those benefits have been multiplied by 10,000 now. Furthermore, whichever businesses chose to optimize their buildings using Cove services before the pandemic, those clients are the leading edge of what physical office space will be in the future. Think about the whole situation like this. Once corporations and smaller entities make the adjustments for distancing, access assurance, safety measures, and added efficiency, how many do you think will switch back to business as usual? I should not have to spell out Cove’s potential here. From custom virtual events to building access management, Cove had a finger on the pulse of office buildings to start with. The next generation of office space will be all about remote work and managing a new kind of physical space. Who better to help transform the work at home corporate synergy? So, Cove has one of those rare opportunities brought about by the cosmos.