Challenging real estate and financial market conditions and an unfavorable capital-raising environment has led to some real estate tech startups shutting down.

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. Factor in that more people were spending more time at home than ever due to COVID shelter-in-place orders, home took on new meaning. Suddenly, many needed more space. Others took advantage of new remote work policies and being constrained by commutes to relocate to new homes.

This led to a boom in business for startups catering to home buyers. Companies (like digital mortgage lender Better.com) 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.

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. At the same time, as the venture market slowed dramatically and suddenly, raising capital was much harder.

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