Silicon Valley and Wall Street both seem to be obsessed with real estate tech. The money is pouring in, and the valuations are sky high.

Why? According to panelists at Inman Connect San Francisco, it’s a combination of perfect timing, opportunity and the reliability of housing as an investment.

“Housing is not going away,” activist short seller Andrew Left said during the panel, entitled, “What You Should Know About Wall Street That You Don’t.”

“The underlying asset is a key asset of people’s lives.”

Left answered questions on stage from Warburg Realty President Clelia Peters and The Agency’s CEO Mauricio Umansky.

Wall Street values disruption more than profitability, Left said. That’s why Netflix briefly had a higher valuation than Disney and why Compass raised $450 million.

“Wall Street pays a lot of money for disruption,” Left said. “It’s still very much up in the air — who’s going to be the ultimate disruptor? In the meantime, let’s just give them all big valuations.”

But beyond disruption — the work of industry veterans like Zillow and Redfin and now the next generation of startups like Opendoor and Purplebricks — the reliability of real estate itself as an investment is part of these companies’ appeal.

“You’re in a market that’s not going anywhere, that will get traded even during recessions,” Left said.

And during economic downturns, companies like Opendoor that are funded by venture capital will likely buy homes when individual buyers won’t. Companies like Purplebricks that cut commission costs for consumers will have more appeal. As soon as consumers have to start selling homes for less than they purchased them for, those companies will gain more traction, Left said.

“Those companies have to be in place to go ahead and take advantage,” Left said.

But real estate tech companies haven’t yet been able to totally replace the role of the real estate agent, and that’s why many of them aren’t yet profitable, Left said.

Email Emma Hinchliffe

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription