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Key Takeaways
Divvy Homes’ Layoffs: Divvy Homes, a rent-to-own startup, is undergoing its third round of layoffs in a year, highlighting the challenges it faces as mortgage interest rates rise.
Impact of Surging Rates: Rising interest rates, beginning in March 2022, are affecting not only Divvy Homes but also other proptech companies like Better.com, which has experienced significant layoffs.
Business Model Scrutiny: The New York Times investigation into Divvy Homes’ business model has revealed higher-than-average monthly bills for renters, adding to the company’s difficulties in the current economic climate.
Divvy Homes Turmoil (Third Round of Layoffs Rock Proptech Industry Amid Soaring Interest Rates): Third Round of Layoffs in a Year
Divvy Homes, a rent-to-own startup that once boasted a $2.3 billion valuation in 2021, is now facing its third round of layoffs within a year.
The company is letting go of 94 employees, marking another setback for the real estate tech firm as mortgage interest rates continue to rise.
Impact of Surging Interest Rates
Mortgage rates reached historic lows in 2020 due to the COVID-19 pandemic, but have been on the rise since March 2022 when the Federal Reserve began efforts to curb inflation.
Divvy Homes is not the only proptech company struggling in the face of increasing interest rates.
Online mortgage lender Better.com has laid off thousands of workers since December 2021 and recently experienced a disappointing debut on the stock market.
Divvy’s Business Model Under Scrutiny
The New York Times investigated Divvy Homes’ business model, finding that it left renters with higher-than-average monthly bills.
This revelation adds to the company’s challenges as it navigates the current economic climate.
Other Proptech Companies Facing Similar Challenges
Divvy Homes is not alone in facing difficulties due to rising mortgage rates and a slowdown in the housing market.
Other real estate technology companies, such as Opendoor, Redfin, Compass, Better.com, and Homeward, have also experienced challenges in 2022 and 2023.
References
- AIM Group
- Better Business Bureau
- Commercial Observer
- Divvy Homes Blog
- Divvy Homes Official Site
- Dot.LA
- Globest
- HousingWire
- Inman (April 2022)
- Inman (September 2023)
- LAB Ventures
- Layoffs Tracker
- LinkedIn – Joe Standley
- LinkedIn – Mário Portugal
- LinkedIn – Zealous Tiger
- PlanRadar
- Robots.net
- SelectHub
- TechCrunch (January 2023)
- TechCrunch
- The Leader News
- The Real Deal
- Today’s Esquire
- Yahoo Finance
