Real Estate Shows Tech Is No Holy Grail

Everyone wants to be a tech company. Office-sharing, meat substitution, ride-hailing, fashion styling, fitness—they are all technology businesses, according to founders who covet the high-flying valuations the appellation can garner in the public markets.

But just having technology doesn’t automatically make an investment superior. Consider real estate’s digital home flipping: Here is a business that is undoubtedly “tech” but where the value of the technology isn’t yet clear. With iBuyer Offerpad’s merger with blank-check firm Supernova Partners expected to close early this quarter, the value of technology—or lack thereof—is something that online real-estate investors will want to consider as they place their bets in a crowded field.

So-called “pure play” iBuyers Offerpad and competitor Opendoor Technologies both describe themselves as technology companies. Opendoor says it is a “digital platform for residential real estate.” Offerpad says it is focused on “tech-enabled real estate solutions.” Both companies have a chief technology officer and some version of a data scientist, presumably there to hone the technology investments and analyze their utility.

These companies may be solving similar pain points in seamlessly digitizing real-estate transactions, but they seem to be approaching the problem in different ways—Opendoor with money and Offerpad with experience. As of its March presentation, Offerpad said it had raised less than 9% of what SoftBank-fueled Opendoor had, though it had bought and subsequently sold 38% as many homes. And whereas Offerpad is led by a former real-estate agent, Opendoor is led by someone from the real estate technology business.

Opendoor’s deep pockets have no doubt fueled its rapid growth. It is now active in 39 markets with the stated goal of entering 42 by year-end—double the number of markets Offerpad is targeting this year, despite being only one year younger. But bigger doesn’t necessarily mean better: Opendoor lost far more money last year.

According to company presentations and regulatory filings, both companies had roughly the same gross margins last year, suggesting they are equally good at pricing homes and timing the market. An analysis by scholar-in-residence at the University of Colorado Boulder Mike DelPrete shows the difference in economics lies in “indirect costs” such as technology, the sales and marketing of that technology and the salaries of the people who build it.

Mr. DelPrete’s analysis shows Opendoor sold a little more than twice as many homes as Offerpad last year, but its technology and development expenses were about eight times higher over that period. A look at regulatory filings from both companies shows that dynamic was also true at least in the two years before the pandemic, albeit at a slightly lower ratio. The takeaway: Either Opendoor’s technology isn’t all that it is cracked up to be, or its investments have yet to pay off.

Opendoor says it isn’t blindly pursuing growth for growth’s sake, but making strategic investments in pricing, technology and operations platforms as it scales. The goal, according to the company, is to build a platform capable of high volume. With the real-estate market on fire, it is certainly working that angle: Opendoor’s spent almost as much on technology and development in the first quarter as it did in all of 2019.

The business of iBuying is still nascent: Opendoor says just 1% of real-estate transactions today occur online and iBuyers claim that they are competing against the traditional agent model of buying and selling rather than one another. But the slice of the market open to iBuyers has become crowded, creating a land grab atmosphere. Especially, as the pandemic has shown a generation of tech-savvy millennials finally seem to be hitting the home-buying market, time is of the essence.

Offerpad’s SPAC deal reportedly gave the company a post-transaction value of $3 billion, well below Opendoor’s current fully diluted market value of $11 billion. When comparing the two, investors should at least consider the fact that technology is only as valuable as its competitive advantage.

OTTAWA–The nascent recovery in Canada’s housing market has become a casualty of the trade dispute with the U.S.

The latest national home-resale data are due out Tuesday, but early indications from several big regional real-estate boards suggest March was overall another down month as many prospective buyers exercised caution.

The recent weakness in home sales has dimmed the previously brighter outlook for the property market coming into 2025, when buyers were encouraged by the Bank of Canada’s aggressive interest-rate cuts.

“The chills the U.S. trade war has sent through participants in the housing market are getting frostier,” said Robert Hogue , assistant chief economist at Royal Bank of Canada.

Hogue said resales are down materially in a number of markets two months running, and home prices in several markets are coming under pressure as inventories rise. And although Canada was spared additional levies when President Trump unveiled so-called reciprocal tariffs on dozens of countries earlier this month, no meaningful rebound is likely so long as trade uncertainty lingers, he said.

Home buyers in Toronto, Canada’s most populous city and the country’s financial hub, aren’t turning up for the usual spring pickup in property-market activity.

Sales in the Greater Toronto Area slumped 23.1% in March from a year earlier, as new listings for the region jumped close to 29%, according to the Toronto Regional Real Estate Board. That marked the worst month of resales since 1998.

The board’s chief information officer, Jason Mercer , said many potential home buyers were likely taking a wait-and-see approach given the economic worries as well as a pending federal election. “Homebuyers need to feel their employment situation is solid before committing to monthly mortgage payments over the long term,” he said, adding that ownership has become more affordable and prices in the area fell about 3.8% year on year in March.

Uncertainty is also weighing on the housing market in Calgary, the biggest city in oil-rich Alberta. The city’s real-estate board said realtors reported a 19% drop in sales of existing homes from last year, with a similar trend of improving supply and a sharp increase in the average number of days that homes were on the market.

On the West Coast, home sales registered in the metro Vancouver area of British Columbia were the lowest for March since 2019, falling 13.4% on a year earlier and coming in close to 37% below the 10-year seasonal average, while active listings continued to rise.

There are some areas of resilience. The Quebec Professional Association of Real Estate Brokers said total sales in the province were up 9% year on year in March. Still, RBC’s Hogue estimated Montreal sales in March were down about 15% from December seasonally adjusted, effectively rolling back the advance since the end of last summer.

The most recent national data for the country, from the Canadian Real Estate Association, showed resales dropped 9.8% month over month in February, when homebuyers may also have been put off by harsh winter storms in parts of the country. That marked the sharpest fall since May 2022 and brought the level of sales to their lowest level since November 2023, snapping signs that activity had been picking up in recent months.

Rishi Sondhi , an economist at Toronto-Dominion Bank, in a recent report estimated the country was tracking toward a double-digit quarterly decline in Canadian home sales and a mid-single-digit drop in Canadian average home prices for the first three months of 2025. That is much weaker than a pre-Trump inauguration forecast made in December that projected a loosening in federal mortgage rules, lower interest rates and continued economic growth would fuel a modest gain in sales and prices.

Central-bank officials are set to decide Wednesday on monetary policy, but they have signaled a cautious approach to rates as they balance the prospect of tariffs stoking price pressures against the likelihood that they will dampen demand and weigh on the economy. That could mean the Bank of Canada will pause after seven straight cuts to its policy rate.

Housing is a hot topic for party leaders campaigning ahead of the April 28 election, with both the incumbent Liberal Party and opposition Conservatives proposing tax cuts and incentives to encourage buyers and builders.

The outlook for new homes has also dimmed with the tariff threat. The value of residential-building permits issued in February fell 2.9% from a month prior, adding to a retreat in January that took back some of the surge in intentions in the final month of last year, Statistics Canada data last week showed.

Real Estate Shows Tech Is No Holy Grail

In iBuying, just because you bet on technology, it doesn’t mean you’re a winner.

Early indications from several big regional real-estate boards suggest March was overall another down month.