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Real Estate Fintechs Feel the Heat as Macro Trends Unfold

TechCrunch| Mary Ann Azevedo | Aug 28, 2022

Real estate - Real Estate Fintechs Feel the Heat as Macro Trends UnfoldThen 2022 came

In 2020, historically low interest rates led to a surge in both rates and purchases. Existing home buyers rushed to alter the terms of their loans and aspiring home buyers took advantage of those low rates to purchase homes.  More people were spending more time at home than ever due to COVID and many needed more space. Many relocated to new homes due to remote work possibilities.

This led to a boom in business for startups catering to home buyers. Companies (like digital mortgage lender couldn’t keep up and had to go on a hiring spree to meet all the consumer demand. Venture dollars flowed into proptech after proptech.

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Then 2022 came:  Mortgage interest rates, which began their ascent in 2021, continued to climb…significantly. Prospective home buyers, turned off by the rate surge as well as the competitive and overheated housing markets, began to reconsider their plans, as buying was suddenly far less appealing so they turned to rental markets like Rentola.

  • At the same time, as the venture market slowed dramatically and suddenly, raising capital was much harder.
  • Layoffs in the sector began — and they took place in a range of real estate tech companies, big and small.
    • Digital mortgage lender (first round of four layoffs; you can read that here)
    • Real estate tech startup Reali announced last week that it had begun a shutdown

Many fintechs are now focusing on nonprofits

Last week, I came across, or was pitched, several tidbits of news that made me realize that an increasing number of fintech companies are launching products to help nonprofits and charities more efficiently move, raise and distribute more money.

  • First up, fintech startups Highnote and GiveCard said they are partnering to help nonprofits, shelters and governments issue prepaid debit cards to the “financially vulnerable” communities they serve.  Studies show direct cash payments can put people on a path to permanent housing and end their reliance on predatory lenders.

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  • Los Angeles–based B Generous, a self-described “fintech for good” platform, has launched Donate Now, Pay Later (DNPL), a new tool it says allows donors “to make contributions to their favorite nonprofits through a proprietary philanthropic credit product called a Point of Donation Loan
  • PayPal is expanding further into the charitable donations business with its August 25 launch of support for Grant Payments.

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