The high-rate era ushered in more than just slow home sales.
The years when the Federal Reserve quickly hiked interest rates to the highest level in over two decades — and held them there — also took a toll on tech-based companies in the real estate space.
Huge rounds of fundraising that fueled upstarts or sought to propel growth at existing proptech companies dried up. As mortgage rates spiked, homebuyers pulled back, and the companies that had rapidly scaled to serve them began to suffer.
“It was a very challenging time. A lot of proptech companies died; a lot of proptech companies pivoted,” Fifth Wall CEO Brendan Wallace told Inman. “We had this Cambrian explosion of funds and proptech companies, and then a meteor hit, and there was this extinction event.”
But after a three-year era that Wallace called a “proptech winter,” the investor now sees signs of a “proptech spring.” Wallace and other investors and business leaders shed some light on changes in the market and where they see the industry going now.
Proptech winter
Companies using technology to innovate some sector of real estate saw a blitz of activity during the COVID housing market, followed by a bust cycle driven by high rates. Among those impacted were firms trying to give buyers more powerful offers circa 2022, which then saw demand for that aspect of their business plummet.
“You saw a lot of power buyers who were helping buyers buy; those products declined in demand,” Homeward CEO Tim Heyl told Inman last summer.
The power buyer Ribbon, for example, began shedding staff in 2022, before it was acquired by the sale-leaseback platform EasyKnock the next year. EasyKnock would then close its own doors in 2024.
More recently, Curbio, a leader among companies offering pre-sale renovations at a wide scale, was also looking to reinvent itself this year.
“It’s been a rough couple of years for proptech and real estate,” Curbio CEO Rick Rudman wrote in a recent post on LinkedIn. “After growing Curbio from $0 to $70m in revenue in 2023, we had to spend 2024 reinventing our business.”
“Curbio has moved out of the ‘fix-first, pay-at-closing’ market that served us well during the boom years of real estate,” Rudman said in another post.
A reason for optimism?
But Wallace said he has seen signs that might indicate the “proptech winter” is ending.
He pointed to a “capital markets, financial and emotional malaise that had just fallen over the whole proptech ecosystem” — but added that “the companies that did survive were the ones that found a way to revise or reposition their business.”
Specifically, Wallace pointed to Eric Wu and Keith Rabois rejoining Opendoor’s board of directors as a sign that the industry had turned a corner.
Leading iBuyer Opendoor replaced key members of its leadership team in late 2022, including Wu — who had co-founded the company. The firm burned through hundreds of millions of dollars and posted a net loss in all but one quarter after that, while its stock price fell to a low point of $0.51 per share.
This summer, the company’s stock became a sensation among retail investors and the company’s co-founders, who had long since moved on while the company struggled.
Opendoor is in the midst of a major leadership transition that includes pondering what kind of company it wants to be in the future.
“The success of Opendoor in the public markets is a harbinger of a renewed momentum you’re going to see in the proptech ecosystem,” Wallace said.
“You’re seeing for the first time far more enterprise value being created in proptech than being destroyed,” he added. “That’s not something you saw in 2023 or 2024, but it is 100 percent something we’re seeing in 2025.”
There are other signs of a potential proptech spring.
Mortgage company Better, which struggled through a series of layoffs after the refinance boom from the low-rate era ended, recently announced a series of partnerships and a $75 million raise after renewed interest by investors sent its share price soaring.
The team behind Ribbon, which was acquired by EasyKnock, more recently launched an AI-powered transaction platform in the form of a company called Indigo. That company secured an $8 million seed funding round earlier this year.
But there’s another set of companies that have the attention of Heather Harmon, a proptech expert who previously sold her company, RedDoor, to Opendoor.
“Where we’re going to see true innovation emerge is around the consolidation of the consumer experience, delivered in a data-driven way that takes away at least 50 percent of the steps of the experience itself,” Harmon said.
Harmon said real estate professionals are often overly optimistic that their roles in the homebuying and selling process are indispensable.
She said she’s closely watching three sectors of proptech companies moving forward: Those like CoStar that are at the top of the sales funnel, those like Opendoor that specialize in the property itself and those like Rocket that are focused on financial data.
“At this point, tech can already do a better job than most of the human agents that are inserted along the process,” Harmon said. “If we recognize that and adapt to it and put the right humans in the right places at the right times, that’s the emerging company that’s going to change the industry.”
