[Note from the editor: Originally published on Thomvest’s Blog]

I’m excited to release Thomvest’s real estate technology market map, which includes more than 240 companies operating within the residential real estate segment. This is the third update to the market map and includes over 100 additional companies — a testament to the pace of entrepreneurship in this segment. A high-resolution version of the map can be accessed here, the full list of companies is available here, and my commerical real estate market map is here.

So much has happened in the housing market over the last year — home pricing across the U.S. are up 16% year-over-year, interest rates remain near historic lows and housing construction starts are up meaningfully for the first time in more than a decade (for more detail on this, see my recent housing market update). Times have also been good for technology companies in real estate — several companies in the sector went public over the last year, including Opendoor, Compass, Better and Blend (a Thomvest portfolio company). Venture capital activity in real estate has also remained quite strong — investment in the category reached $8 billion through the first 9 months of 2021, a record.

This market map real estate technology companies operating across every phase of the home purchase value chain. These companies have collectively raised more than $30B in venture capital, and range from seed stage businesses to public companies. If you’d like to suggest a company to be added to this market map, please submit them using this form.

You’ll notice that several companies are included in more than one section — this is due to the fact that many of these businesses have expanded their product areas to capture multiple phases of the transaction process. For instance, while Blend’s original product focused specifically on the mortgage point-of-sale, the company has since expanded to offer title services, home insurance and closings. As such, we’ve included the Blend logo in those areas.

At Thomvest, we’ve long been excited about the opportunity to bring technology into the real estate segment, and have been fortunate to partner with many great companies. Personally, I’ve been impressed by the quality of entrepreneurs building technology companies in residential real estate. Many have experienced their own frustrations when buying or selling a property, and aspire to rebuild the experience from the ground up. Others are seasoned operators within real estate and see technology as a competitive advantage in an otherwise analog asset class.

In last year’s market map, I touched on the impact of COVID-19 and related lockdowns on the housing sector. In particular, the pandemic forced many constituencies within the real estate sector — including agents, lenders, title companies, attorneys and GSEs — to embrace digital tools. We expect adoption of digital tools to persist in a post-COVID housing market. For example, the Federal Housing Finance Agency (FHFA) recently announced its intention to continue accepting desktop appraisals for purchase loans beginning in early 2022.

In addition to tailwinds around technology adoption in real estate, we’re particularly excited about a few areas within the housing value chain:

1. Expanding access to home financing options

While record home price appreciation has been a boon to existing homeowners, it increases barriers to homeownership for prospective buyers. This is particularly true for first time buyers or those without strong credit scores (the vast majority of mortgage originations in 2021 have gone to borrowers with credit scores of 760 or more). Companies like Landis and Divvy have become popular options for prospective buyers who need time to build up their credit and downpayment. Both companies operate a “rent-to-own” model, which allows buyers to gradually build up ownership of a home.

We are also fans of companies at the intersection of fintech and real estate that seek to streamline and accelerate the traditionally fragmented process of purchasing a home. This can include mortgage technology providers (like Blend and Maxwell) that minimize the need for multiple intermediaries and lower mortgage production costs for lenders. We expect this to be particularly important as mortgage rates rise over the next year, putting stress on lenders to become more operationally efficient.

2. Novel real estate agent and brokerage models

Agents continue to play an important in the home purchase process — 88% of buyers purchase their home through a real estate agent, according to NAR. But COVID has caused many agents to reassess the value provided by their brokerages, who typically capture between 15 and 30 percent of agent commissions. Several new brokerage models are emerging, which promise better commission splits to agents, as well as a more robust technology platform and other value-add services, such as renovation or financing. Companies like Side, PLACE, Enkasa and Radius are all developing interesting brokerage platforms for agents.

3. More tools for homeowners to manage their largest asset

As home prices continue to rise, homeowners’ equity in their properties represent an outsized portion of their total wealth. In the second quarter of 2021, homeowner equity grew by nearly $3 trillion, according to CoreLogic. As a result, we expect to see increased demand for financial products that allow homeowners to tap into this equity, which has historically been illiquid. Companies like Hometap and Unlock allow owners to access up to $500K of their home equity. And Point recently completed the first securitization of these home equity investment agreements, which should lead to better pricing for owners over time. We are also fans of companies that simplify the home renovation process (like Eano and Realm) and property management (like Baselane and Mynd), both important components of home ownership.

In the next few weeks I will also publish an updated commercial real estate market map.