Unsticking the Single Family Owner
With mortgage rates at levels not seen in years, many homeowners are stuck with their houses. But there's a new generation of companies aiming to get them unstuck.
Thesis Driven dives deep into emerging themes and real estate operating models. This week’s letter explores the companies that are building products to help homeowners unlock their home equity—and renters buy their first home.
Homeowners and renters alike are stuck. With interest rates at decade-plus highs, Americans across the wealth spectrum are finding it impossible to move.
Homeowners lucky enough to have locked in low-rate mortgages over the past 15 years face a conundrum: while they have significant home equity value, selling their current home and buying a new one would mean paying a much higher rate for a similar property. This means either sticking with a property that isn’t meeting their needs or facing a meaningful downgrade in location or quality.
But aspiring homeowners are in an even tougher position, staring down dizzying mortgage payments driven by a double-whammy of rate increases and rapid home price increases over the past three years.
The end result is a nation stuck in place. Families can’t buy their first home or upgrade to a larger one with more bedrooms. On the flip side, aging empty nesters can’t downgrade from too-big suburban homes. And working professionals just looking to move from one city to another are forced to choose between eye-watering mortgage payments and a downgrade in home size & quality.
But a new wave of companies are aiming to come to the rescue with a raft of novel products for homeowners and renters alike. Today we will separate the signal from the noise, analyzing the world of companies building products to help single-family homeowners buy, sell, or move. Specifically, we’ll look at:
Products to Unstick Homeowners, including:
SFR-oriented property management
Products to Unstick Renters, including:
Upside sharing arrangements
Each concept has its own pros and cons, drawbacks and opportunities for the company, real estate investors, and the homeowner themselves.
Let’s dig in.