The Insider: Issue 040
This week’s issue is all about mysterious letters, spooky lakes, valuations returning to earth, the dark side of opportunity, and the lightness of five-year-olds. A fun mix, no?
Something Different
Cash-offer lender Knock’s valuation came back down to earth last week. The company laid off half its staff and took on a new “down” round of financing. We do not think this spells the end for Knock, or the many others (Homeward, Ribbon, Flyhomes, Orchard, etc.) playing in this space. Not even close. Like molecules, businesses like this move slower when it gets cold. And the SPAC/IPO environment has definitely chilled. But things will continue moving.
LendingTree published a study showing that there are 16 million vacant homes in the U.S. There’s a lot in that number, including vacation homes, and it all kind of makes sense... while also making no sense. At a high level, it seems to us that we have a crisis of imagination and utilization in housing stock. You can see why a company like Pacaso is taking off like a rocket ship. There are, no doubt, many other such opportunities to re-think how we build, own, and use housing.
Walmart cut a deal with Lenders One, a cooperative of non-bank lenders, to sell mortgages in its stores. This “store-in-store” play is not entirely new, but it is significant at this moment in time. With refis evaporating, there’s a full-court press happening to get in front of buyers early. Seems like a good time for mortgage companies to get better at marketing.
Have You Heard About This?
Flipping Out
House flippers have been around since the Stone Ages (or something like that), but any time you have a housing market gone mad with double-digit increases in value year after year, people from all walks of life jump in to profit. Not saying there’s anything wrong with this. We are a capitalist society after all. But there’s something gross and creepy when flippers start pretending they’re young couples starting out and “just looking for a home to settle down in.” A letter from one of these flippers came in this form in one of our mailboxes in Oakland last week. Given the extremely tight inventory in this particular market, the actions felt a bit predatory — not toward the homeowner, but in the grand scheme of buyers and the shortage of affordable homes. We know Oakland isn’t alone, and we all sense a housing crisis brewing in pockets across the U.S. (See how the share of investors buying homes is growing everywhere.) (See also a recent Senate Committee on Banking, Housing and Urban Affairs committee hearing, “How Institutional Landlords Are Changing the Housing Market.”)
So, what do we do? We can’t prop up housing as the American path to prosperity, while also making it an impossible achievement for more people every year. Is regulation the answer? And what would that even look like? Who wants to live in a city where only a select few can afford to live? Or where a big swath of homes are owned by an investor in some other state? We don’t have answers, but we think we’re at a point beyond gawking over “how crazy it is.” It’s time to shift the conversation to creative solutions. Got any?
Let’s chat in the Inside LinkedIn Group.
What's Inside
Join us in The Lounge this Thursday at Noon Pacific, 3:00 P.M. Eastern. We’ll be sharing wisdom on competing with iBuyers and other “monsters”. It’s a members-only, free-wheeling, un-recorded discussion that’s sure to spark ideas. Sign up here.
If you didn’t download our Original Research report on consumer reactions to common real estate messaging and advertising, take a minute to do it now. It’ll get you thinking about new directions for your own brand-building efforts.
Inspiration Point
There Was This Lake In Michigan…
What do you do when you have the budget and creative freedom to do some serious out-of-the-box advertising that’s not just another TV commercial? You create a true-crime podcast about a mysterious lake that shares your brand name. Well, if you’re the folks behind our favorite Swedish oat milk company, Oatly, that’s what you do. Check out the latest from one of the most creative companies on the planet, and see what you can glean about branded content to use in your next content marketing campaign. It’s silly. But isn’t this stuff supposed to be entertaining?
Lighten Up
The above post was spotted on Reddit this week. So we checked it out. It’s real. If you have 5 minutes at the end of your day, it’s worth dialing in for some life advice from a group of kindergarteners. Don’t miss the laugh line. Not everything is heavy.
Quote of the week
“Everyone wants to be a challenger brand, but I’m not sure if everyone really knows how much of a pain it is.”
—John Schoolcraft
