- Many believe one-stop-shop homeownership will change the world of real estate.
- Approximately 6M homes sold every year
- Approximately $1.6T in first mortgages made every year
The housing market is worth approximately $30.7T. $11T of that $30.7T goes to home loans; $19.7T of that $30.7T goes to equity owned by homeowners; and, approximately $1.6T of that $30.7T goes to first mortgages made every year.
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Why are these numbers important? Because fin-tech and prop-tech startup pitches begin with this total addressable market (TAM.)
Keith Roberts of the Founders Fund has a winner-take-all unicorn vision or TAM vision of real estate. Roberts is a member of what is known as the Harvard Stanford PayPal Mafia and when Roberts speaks, people listen. As an investor and/or executive in such firms as LinkedIn, Yelp, YouTube, Yammer. Lyft, Airbnb, Eventbrite and a co-founder of Opendoor and pioneer of the iBuyer model, Roberts has earned his listening audience.
Opendoor is known as Goldman Sachs West among investors due to its highly skilled capital markets team. Opendoor, along with Zillow, is being aggressive in scaling mortgage lending as part of its one-stop-shop strategy.
In some ways, Opendoor has a leg up on Zillow because of its well-connected co-founder, Keith Roberts. Opendoor is now worth nearly $4B and well on its way to realizing its one-stop-shop strategy for all home buying, selling and owning. Additionally, Opendoor is committed to monetizing the entire homeownership life cycle.
On the other hand, Zillow has a leg up on Opendoor with its current market cap of $9.8B. Zillow is also telling Wall Street that it intends to grow its revenue from today’s $1.3B to $20B in the next four years. If Zillow reaches its goal, it would have 1% of all home sales and 0.4% of all mortgage funding annually.
Whichever company “wins,” would any other iBuyer company (and that company’s ancillary real estate services) be able to elbow out either Zillow or Opendoor?
Just remember that venture capital-backed home lending startups fill key niches within real estate – first-time buyer, cash-out and investor niches. And, just remember how hard it is to fund a $5B business and how even harder it is to fund a $10B business and how harder still it is to fund a $20B business. It has taken the top ten mortgage lenders between one-three decades to build their billion dollar plus businesses. Opendoor launched its business in 2014 and Zillow launched its in 2004. Are they already too far ahead of the pack for any other real estate disruptor to catch up or will Zillow and Opendoor simply take it all?
Thanks to HousingWire’s Julian Hebron for source material and data.