The Picket team had quite a year—as did the SFR sector and the economy at large.
In the midst of one of the greatest domestic migration events in decades, single-family rentals became the residences of choice for an increasing number of Americans and the investment of choice for an increasing number of institutional investors. A roaring job market offset the first growls of inflation, and the real estate market remained hot, high-priced, and high-value against a backdrop of persistently limited housing supply.
With the spotlight of the Fed turning quickly on ballooning inflation in the last three quarters, the real estate market in particular has felt the effect. Buyers wait for list prices to respond to higher mortgage interest rates and depressed demand. Sellers wait for better reasons to give up the low mortgage interest rates they locked in over the past several years. More consumers decide to rent homes for the dual benefit of lower monthly expenditures and increased flexibility. And rents stay elevated across the hottest markets in America.
Picket has closely monitored these shifting dynamics while navigating a steady course. Our mandate remains clear: Build the team and technology that will transform the experience of renting a home.
Through multiple product launches, world-class data science, blazing market expansion, and exciting team growth, Picket is positioned to lead in the SFR space as capital deployment accelerates and single-family renters become the dominant demographic in the housing landscape.
Despite the pull-back of acquisition activity in the SFR space during the last three months, the underlying supply and demand fundamentals that drove enthusiasm for the sector remain strong.
Nadia Evangelou, a senior economist and director of forecasting for the National Association of Realtors, estimates we have a nationwide housing shortage of roughly 5 million homes. Meanwhile, according to an Apartment List survey in April 2022, the proportion of Millennials who plan to ‘always rent,’ continues steadily climbing and now includes nearly 25% of the generation. The data demonstrate that Gen Z preferences are following suit. It’s no surprise, then, that rents continue to grow in markets with great weather, affordable cost of living, and strong job markets. And economists predict those same markets will enjoy persistent HPA growth even as home prices in some of the darlings of pandemic-era in-migration come back down to earth (a la Boise, Austin, Salt Lake City, Spokane). Rents drive yields, HPA drives total return, and the continued strength of both in top rental markets shows why SFR will continue to attract and reward the world’s investors.
More than $110 billion of institutional capital has been earmarked for the SFR space, helping to drive up institutional ownership from its current 3% of single-family rental housing stock to a projected 10%+ by the end of the decade.
But the demand for SFR portfolio aggregation at scale has historically outpaced the tools and services available to support it. That, we’re happy to report, is now changing. The real estate technology landscape has evolved dramatically in the last couple years.
We recently attended IMN’s 10th annual Single Family Rental Forum in Scottsdale, and the exhibit hall was packed with solutions providers for every facet of the investor journey. While we count ourselves among them, we believe our approach to solving the unique challenges of SFR investing and management at scale will not only stand the test of time but emerge as the gold standard in the industry.
The SFR technology sector is following a familiar ‘disruption’ trajectory.
Phase 1
Legacy operators, cobbling together home-built solutions to the emerging problems of continued growth, post revenue gains ploddingly but convincingly, turning the heads of innovators and capital providers who have long overlooked the industry.
Phase 2
Operators from within the industry and technologists from beyond it set out to find a better way to scale. They begin tackling one link in the value chain at a time, spurring minor reformations and useful optimizations within the realm of discreet problem sets. The rapid successes of these emerging solutions rely on legacy operators adopting them into existing infrastructure.
Phase 3
More ambitious capital and more ambitious innovators enter the space to seize a greater opportunity: transforming the whole system. In this paradigm, point solutions are no longer sufficient to the cause; ‘A better way’ demands a completely revolutionary approach, backed by world-class technology.
In the transportation industry, that third phase of reformation was led by Uber. In retail, it was Amazon. In hospitality, Airbnb. In automotive, Tesla.
In residential real estate (drum roll), it’s Picket.
Picket’s mission is to become the world’s first consumer housing brand.
In 2022, we made significant progress in the early phases of our work to become the world’s first consumer housing brand. Looking back from the vantage of year’s end, we’re taking stock of the milestones as we gear up for another big 12 months ahead.
01 | A better way to analyze investment opportunities
We are developing the most comprehensive data set and most sophisticated automated analysis for single-family rental investing in the industry. The investment module of our Decision Science platform (Decision Science Invest) has grown in scope and added functionality throughout the year.
02 | A better way to manage transactions
Helping institutional investors pinpoint investment opportunities at the market and asset level is not enough. We want to help them transact with speed and with complete confidence that every detail in the acquisition process has been handled with rigorous attention to detail.
03 | A better way to rent
The ambition of our all-in-one SFR investing platform is to make the process of buying and managing homes across markets seamless and efficient for our clients. Equally important, we want to make the process of renting a home easy and delightful for our residents. We’re here to tackle both sides of this experience with superior technology and exceptional resident services at scale.
04 | A better version of home
All of our work accrues to one vision of a better version of home. To the extent homeownership was a fixture of the modern American Dream, we’re seeing that dream evolve. But in our minds, the American Dream has never relied on owning more than one’s own destiny, and in that dream, home – not homeownership – has a distinctive role to play. We’re focused on making the experience of a stable, beautiful, affordable home more accessible to more people by directing enlightened capital its way. We’re excited and humbled by all that vision entails. Three years into our journey, we couldn’t be more optimistic about what the next years hold as we continue to invest in the future of home.
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