The Ledger
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Hefets: US home prices will decline 10% to 15% by Q1 2023
“Our view at Divi is that we're gonna start to see heading into Q-one year-on-year declines in home prices across Economist. That is likely to be somewhere around 10 to 15% year-on-year home price declines.”
Hefets: Housing downturn will not be as extreme as 2008 crisis
“So I don't think that we're going to see something as extreme as the, that last housing crisis.”
Hefets: The housing downturn will wipe out gains from 2020 to 2022
“What I do think is that we are going to wipe out some of the gains that were made in the last two to three years.”
Divvy Homes CEO Adina Hefetz was rejected for mortgages by three banks
“I personally applied for a mortgage last week. I applied to three different banks, and I got rejected from all three banks. I was told that as a founder, my current income was too low to support a mortgage.”
Hefets: 80% of Americans cannot afford a home at current mortgage rates
“Based off of our 7.15% average 30 year fixed rate mortgage and then based off of an average home price of 400,000 dollars, 400,000 dollars, which is the average home price in, in the U.S. Only 20%, 20% of Americans, based off the median income, ah, at differen…”
Hefets: Divvy capped annual home buyback appreciation at 6% during market spikes
“It didn't feel right to me, so instead of using exactly what that third party said, I set a cap, and I said, we're not gonna charge any more than six percent appreciation annually, and I don't know where to pull that number from, right?”
Hefets: Tech startups, not government, bear onus to initiate regulatory dialogue
“Is the onus on government to reach out to us and say, hey, let's have a conversation? And truthfully, I don't think that's the case. I think the onus is on us companies to make sure we are opening up that dialogue, that we're showing up for events like this, t…”
Hefets: Divvy and major institutional buyers have paused buying homes
“Yeah, I would say, right now, if you look at any institution, whether it's an iBuyer, a single family rental platform, Divi, then we're not buying homes right now.”
Hefets: Over 50% of US homes hold 50% or greater equity
“There is right now over 50% of homes have 50% or greater equity in the property.”
Hefets: Post-COVID population migration to new cities will stick long term
“We've seen migration to new cities that I think is going to actually stick, right?”
Hefetz: Rising FICO requirements exclude 20% of U.S. consumers from mortgages
“We've gone from having a six 90 average FICO for mortgages up to about a seven 40 average FICO today. While this maybe doesn't seem like a tremendous jump, it actually cuts out about 20% of US consumers, so it had a pretty big impact.”
Hefetz: Divvy Homes achieves higher rent yields than public REITs
“We get more rent per home on sort of a constant purchase price basis versus any of the public REITs.”
Hefets: Mortgage underwriting criteria have not evolved since the 1940s
“The underwriting criteria and the way mortgages were structured were determined then and have yet to evolve since that point in time. So the underwriting criteria, the down payment requirements, most of how the industry functions is almost a hundred years old.”
Hefetz: Consumers prioritize utility and access over owning fixed assets
“There's a new guard for how consumers are thinking about large dollar fixed asset investments, which is they are solving for use, experience, and ultimately access.”
Hefetz: Homeownership is a forced savings asset you can live inside
“From the customer's perspective, it's also really, really helpful for them. It's a forced savings mechanism in an appreciating asset. And by the way, you can live inside this asset. No one lives inside the S&P 500.”
Hefetz: Mortgage underwriting rules remain fundamentally unchanged since the 1940s
“I found that those underwriting requirements are fundamentally the same requirements that we have today.”
Hefetz: Housing market forces binary choice between renting and mortgage
“We believe that the industry today is very binary. You either rent a home or you dive into the deep end and get a mortgage. There is no in between.”
Hefetz: Treating renters like owners lowers vacancy, turnover, and maintenance costs
“When your renters think and act like homeowners, it means you have lower vacancy, lower turnover, and as a result, lower maintenance cost per home.”
Hefets: Divvy Homes customers average $100,000 in household income
“Our customers on average make household income right around a 100,000 dollars.”
Hefets: 51% of Divvy Homes customers are non-salaried or gig workers
“51% Of our customers are non-salaried, meaning that they're not W-II. They'll be a 10 99 hourly so gig economy.”
Hefets: Divvy Homes transactions are 80% female-led and over 50% minority
“Over 50% of our customers are underrepresented minorities, And with our transactions, ah, they're 80% female-led.”
Hefets: US real estate transaction volume has dropped 20% year-over-year
“Transaction volume is a down right now about 20% year on year.”
Hefetz: 1930s federal interventions boosted U.S. homeownership by 20 percentage points
“We saw about a jump in 20% of, in the rate of home ownership over time.”
Hefetz: Millennial homeownership rate sits at around 37%
“So this chart is the rate of home ownership on a constant age basis, and what you can see is that millennials today have a home ownership rate of about 37%.”
Hefetz: First-time homebuyers now make up only one-third of housing offers
“First-time homebuyers used to be about 50% of the offers that got put out. Today, it's only about a third.”
Hefetz: 76% of first-time homebuyers put down under 20%
“Even more depressing is when first-time homebuyers do put offers on their house, 76% of the time they have to put less than the recommended 20% down payment.”
Hefetz: U.S. starter home inventory fell nearly 35% from 2013 to 2019
“But if you look at the decline in the 150,000 dollar price tier, you can see that the decline was almost 35%, which was greater than the decline we saw in 300,000 dollar homes and 500,000 dollar homes.”