Sites and Disruptors Look to the Future of Housing Markets

This article is shared here with permission from Mike DelPrete of Inman Intel, Inman’s data and research division that provides deep insights and market intelligence on the residential real estate and proptech business. Register today.

Even in a depressed market, people are still borrowing and buying houses – and some companies are positioning themselves to take a bigger share of the housing market.

Why is it important: Tracking an MLO (mortgage loan originator) is a sequence of the size of the loan company’s business, and tracking the accounting over time reveals who is investing for future growth.

• Three interesting examples are Zillow, Redfin and Better Mortgage.
• Over the past 15 months, there has been slow and steady demographic growth at Zillow, an equally slow decline at Redfin, and a rapid rise at Better (the classic hockey curve).

Expanding the corporate sector and a look at the past three years provides useful context about growth, decline and relative size.

• Small disruptors are nothing compared to portals and established lending companies.
• It’s better to be in a wild get on.

As a percentageThe best has grown significantly over the past year.

• Tomo gets significant mention as the only MLO stat-boosting bug (but with little basis).

Loan origination documents usually aligns closely with the MLO headcount.

• Zillow’s origination growth remains steady as it continues to invest in and grow its mortgage business.
• Redfin and Better seem to be riding the wave of the season. (Note: (The best origin volumes include the growing financial business, while Zillow and Redfin are the buying volume.)

The nearest metric measuring overall efficiency would be the first volume per MLO.

• Zillow’s has been flat while Redfin has experienced recent increases over the past two quarters, which is the result of occasional volume increases and MLO price decreases.
• Better metrics have been materially better, but have been smoothing, which may be the result of higher volume growth (ie investing for future growth).

Revenue per MLO it’s another performance metric, and in that category, Zillow wins.

• In Q3 2024, Zillow’s mortgage revenue per MLO was $130,000 compared to $114,000 at Redfin and $89,000 at Better.

An important point: Companies that cannot afford MLO are growing aggressively to capture future market share.

• Disruptive mortgage businesses, especially power buyers, remain at a very small scale as they navigate a slow market and adapt their business models.
• The sites are one to watch – as they have acquired mortgage businesses on a large scale – and as Zillow continues to grow its large MLO portfolio.
• Clean mortgage companies are large, especially Rocket, and are well positioned to take advantage of growth opportunities in their immediate areas.