The COVID-19 pandemic has turned NYC’s real estate industry upside down. Between the heightened fears around in-person interactions and a rapidly evolving housing market, the industry has had to digitize at a rapid clip.
On one hand, this has led legacy proptech startups around the country like ButterflyMX, Knock and Breezeway to see a renewed interest from investors and a swelling user base. Last July, MeetElise, an NYC-based digital leasing assistant, announced it is launching a new feature that will allow users to have self-guided virtual tours of the spaces they are interested in, perhaps indicating that the largely in-person process of finding a new home is on its way out.
Orchard has been promoting this shift for a while. Founded in NYC in 2017, the digital real estate startup allows users to find, buy and sell their homes all on one site, avoiding the traditionally complex brokerage process. The company has done especially well lately, raising more than $100 million in 2020 alone amid a surge in demand. It also launched a new product that helps users pre-qualify for mortgages online.
“Our vision is to bring real estate into the modern age by allowing customers to manage their experience through one simply digital platform,” said Orchard CEO and co-founder Court Cunningham after raising $69 million last September. “In the same way Amazon has fundamentally changed retail, and Carvana has innovated the car buying experience, Orchard is putting the customer first and modernizing the home buying and selling transaction.”
This is not just true for existing companies though. Many new NYC real estate tech startups have been cropping up over the last several months too, potentially transforming the notoriously tech-averse industry for good.
From Resistance to Reinvention
New York has long been considered a leader in real estate, mainly because it is “one of the most dynamic real estate markets in the world, if not the most,” says Edward Mermelstein, an NYC-based luxury real estate consultant and foreign investment advisor.
He also says despite — or, perhaps, because of — its large size, the industry has been “stuck in the last century” for a long time, and has remained fairly resistant to digitization except for when it was necessary. For instance, Mermelstein does a lot of work with clients outside of the United States, so he has been relying on things like virtual home tours for a long time.
Domestically, though, that kind of technology had not really caught on yet. Then the pandemic hit.
“When COVID took place, it sort of forced many of these major corporations that are managing tremendous amounts of properties, not just in New York, but all over the country, to go online and to do much of their work online,” Mermelstein told Built In. “It was not something that the real estate industry is very used to.”
Meanwhile, the pandemic also fostered completely new companies offering services and technology never before seen in the real estate industry.
“This is the type of movement that creates new companies that are going to be the next Amazon equivalents for our industry,” Mermelstein said. “Out of this craziness that we’ve been dealing with over the last nine, 10 months, we’re going to see a few companies that are going to explode and create a whole new space within the industry that didn’t exist before.”
One potential star is Casa Blanca, a real estate app that aims to make shopping for homes like using a dating app. Buyers and renters create a profile, list their home preferences, then swipe right or left on the prospective homes that come up, which are sorted based on the given user’s criteria, swipe history and location. When a user finds the home they want, they are matched with a Casa Blanca real estate agent who handles the process from there.
“We wanted to build something that was engaging and made the process of finding a home fun, yet familiar,” Casa Blanca’s co-founder and CEO Hannah Bomze told Built In when the app launched last October. “We’ve integrated the entire home search into a centralized hub to give clients the support and tools they need to find their dream home.”
Bomze is an NYC real estate veteran and says she’s noticed the industry slowly becoming more tech-centric over the years. This is especially true amid the pandemic, so she anticipates Casa Blanca’s history will be bright.
Tech entrepreneur Alec Hartman expects something similar for his own home-buying startup Welcome Homes, which launched last fall after raising a $5.35M seed round.
In a nutshell, Welcome Homes lets you design and buy a house completely online, removing the need for in-person interactions like open houses and meetings with realtors or contractors. Users simply find an available plot of land on Welcome Homes’ website, then customize the cosmetics of the pre-set home model using the company’s platform. Aided by life-like renderings, users can decide what they like and, finally, purchase the home without ever having to leave their couch.
Right now, Welcome Homes is selling plots throughout the Tri-State area, including Westchester County; Greenwich, Connecticut; and Morris and Bergen counties in New Jersey — all red-hot housing markets at the moment.
An Industry Forever Changed
Although the idea for Welcome Homes came about many years before COVID-19, its design is ideal for the socially distant world of post-pandemic America. And Hartman doesn’t see the viability of the model going away any time soon.
“The industry has been going this way for a long time,” Hartman told Built In when the site first launched. “I definitely think there was more of an inevitability of home design going online. But I think COVID has been a catalyst. I would assume that it is here to stay because having transparency from the comfort of your home is really important.”
Mermelstein feels the same way, predicting the transformations introduced in 2020 will likely outlast the pandemic. Of course, in-person interactions won’t go completely extinct, but he says it’s unlikely we’ll go back to the way things were completely.
“I think we’re going to see a significant return of in-person viewing of properties — that’s inevitable. It’s going to come back. Is it going to come back on the same level that we had before COVID? I don’t know about that,” Mermelstein said. “I don’t think it’s going to come back at the same level, simply because there is a whole new generation that has gotten comfortable online.”