Market overview – Single-family
As home sales continue to climb, the residential community has been turning towards all-in-one virtual transactions solutions to avoid home closing delays.
Key drivers in this area include:
- The surge in home sale activities, motivated by rising interest rates, has put homebuyers on an urgent agenda to close deals on homes. Specifically, the residential housing community witnessed a 7% MoM increase of existing home sales in September as mortgage rates surpassed 3% in the same month1. As the interest rate continues to climb, we believe home sale activities will continue into 2022 but at a smaller growth rate as the number of homes of the market decreases
- Homeowners benefitted from rising home prices in 2021, as they saw a YoY 29.3% equity increase, totaling an equity gain of $2.9tn across the US as of Q2 2021. Despite the rising interest rate, we are expecting an upward momentum in housing prices in 2022, given the lack of housing inventory
We believe the overall momentum in home sale activity will sustain and further drive the demand for PropTech into 2022, as well as investment activity in this space.
These drivers are already having their effect on the market, most noticeably:
- Zillow's lack of accuracy in its algorithm to price houses led to its abrupt exit from the iBuying industry in October. Zillow’s withdrawal reduces competition for its major competitors, such as Opendoor and Offerpad, moving their share prices up as much as 20% after Zillow’s exit.
- Mynd, the virtual investment and management platform for single-family housing, increased its valuation by almost three-fold, raising $57.3m to make real estate investing more accessible
- Reali raised $75m in equity as part of a $250m financing to expand its one-stop solutions (from search to close) into other locations
- Lone Wolf's acquisition of Propertybase adds leading websites, CRM, and marketing solutions to its product suite, making it an end-to-end platform for brokers and agents
Investor interest in end-to-end platforms continues unabated as the demand for a more streamlined selling and purchase process grows. These digital all-in-one solutions will, we believe, position the single-family sector for stronger M&A activity in 2022, as platforms look to acquire additional capabilities, aiming for market leadership.
Market overview – Multifamily
In 2021, multifamily investments hit a YTD sum of ~$179bn and are on track to beat 2019's record total of $193bn.
Key drivers for this trend include:
- The multifamily sector continues to show positive momentum in terms of rent growth and occupancy rate:
- Investors are looking to multifamily assets as a hedge to rising inflation as the apartment rental activity spikes, driven by rising home prices. We believe this momentum will continue in 2022, as housing prices look set to continue rising
PropTech has changed multifamily ownership, tenant experience, and leasing operations fundamentally, providing an alternative real estate experience with higher speed and transparency. We believe the recovery of the multifamily sector will continue to boost the need for digital solutions and investor interest in this space in 2022.
Evidence of these drivers can be seen in particular market updates, including:
- Inhabit IQ's acquisition of Resman in August 2021 enhances its core offerings specified to the residential market
- Entrata raised $507m of minority investment in July 2021 to continue expanding its market share
- Blueground raised $180m and tripled its valuations to $750m
- Smaller players, such as June Homes and Ukio, raised $50m and $9m respectively
- Sonder is also positioned to go public via SPAC
Digitizing property management remains the focal point in the PropTech investment landscape, as property managers are looking for more visibility and transparency in their operations to save time and costs.
Investors are also betting on the remote working trend that fuels demand for higher lease flexibility to invest in short-term rental firms.
As multifamily operators are leaning towards technology solutions for increased cap rates, we believe investor interest in multifamily-focused PropTech offerings will persist in 2022.
Market Overview – Commercial real estate
Fueled by accelerated economic reopening, commercial real estate (CRE) gained momentum to achieve a strong recovery in 2021, which we believe will persist into 2022 as people are adapting to life with the ongoing pandemic.
Macro drivers for this recovery include:
- The CRE community has witnessed record sales of more than $193bn, with intensified investment activity in life-science labs and industrial properties
- Weaker-performing assets in the past quarters are making a better-than-expected recovery despite the spread of new Covid variants:
- The office segment shows signs of revival in the secondary market with strong rent growth, specifically in the Sunbelt states such as Florida
As the CRE community looks to return to pre-pandemic normal more cost effectively, we believe digitization offerings that provide CRE leaders the flexibility to realign resources will become the main investment theme in the space.
The growth of PropTech in the CRE space is shown by:
- CBRE’s 2021 Occupier Sentiment Survey indicated that 87% of large companies plan to roll out hybrid work models. This new normal translates into heightened investment activity in workplace management solutions, which employers rely on for actionable data to plan better:
- Virtual workspace solution providers also capitalizing on the switch from centralized offices to distributed workspaces to reconnect hybrid/remote workforce through informal communications:
We believe tech-based workplace solutions that revolutionize the traditional work model will gain significant interest from investors in 2022 and beyond, and the development of these digitization offerings will continue to reshape the landscape of CRE.
Based on the evolving macro-economic conditions and increasing PropTech adoption, we believe capital investments will continue to accelerate in 2022 across the real estate industry. We anticipate seeing higher M&A and public listing activity in single-family and multifamily sectors, as platform companies look to scale by expanding product suites and geographical coverage. On the other hand, CRE-focused real estate tech companies are also riding the investment momentum wave from the single-family and multifamily markets to raise capital. The CRE community is embracing digital transformation, setting the stage for more growth in 2022.
For more information and insight into the US Real Estate market, please reach out to our team
What to read next
 ‘Existing home sales surge as interest rates point higher’, ABC News, 21 October 2021
 ‘Homeowners Gained $2.9 Trillion in Equity in Q2 2021, CoreLogic Reports’, CoreLogic, 23 September 2021
 ‘iBuying? No, iSelling as Investors Dump Zillow Shares’, The Real Deal, 4 November 2021
 ‘Opendoor shares soar after Zillow’s Exit’, CNBC, 4 November 2021
 ‘Mynd Raises $57.3M to Give People A Way to Invest in Rental Properties remotely’, TechCrunch, 16 September 2021
 ‘Reali Raises $250M in Equity and Debt Financing’, Inman, 18 August 2021
 ‘Lone Wolf Acquires Propertybase to Complete Real Estate's Ultimate Tech Platform’, PR Newswire, 25 August 2021
 ‘Q3 2021 US Multifamily Figures’, CBRE, 03 November 2021
 ‘Report: U.S. rents surged 7% from October to November’, The Real Deal, 20 December 2021
 ‘Apartment Occupancy Just Hit a Historic High. Is That Good?’, Bloomberg, 6 January 2022
 ‘Inhabit IQ Adds ResMan to its Suite of Solutions for Property Managers’, PR Newswire, 27 August 2021
 ‘Entrata Raises $507M Led by Silver Lake, Ryan Smith and Todd Pedersen’, PR Newswire, 7 July 2021
 ‘US Rental Start-Up Blueground Raises $180m to Fuel Expansion’, The National News, 22 September 2021
 ‘Softbank and Demi Lovato Back June Homes’, TechCrunch, 22 September 2021
 ‘As Remote Work Becomes Normal, Ukio Raises 9m for Premium Long-Term Rentals’ TechCrunch, 24 September 2021
 ‘Sonder Will Merge with SPAC to Go Public’, The Real Deal, 30 April 2021
 ‘Commercial Real-Estate Sales and Values Surge to Records’, Wall Street Journal, 26 October 2021
 ‘Office Leasing Activity Weakens and Occupancy Declines Anew in 2021 Q4’, NAR, 10 December 2021
 ‘U.S. Real Estate Market Outlook 2022’, CBRE, 2021
 ‘iOFFICE Announces Strategic Growth Investment from Thoma Bravo’, PR Newswire, 1 July 2021
 ‘iOFFICE and SpaceIQ Combine to Create Industry's Most Comprehensive Portfolio’, PR Newswire, 25 August 2021
 ‘Teamflow Raises $35 Million to Bring Informal Collaboration To Hybrid Work’, Forbes, 26 July 2021
 ‘Nooks Set to Seed Its Own in The World of Virtual HQs’, TechCrunch, 14 July 2021