Real estate in 2021 was weird, wild and always unpredictable

Jim Dalrymple II

3 years ago

Meredith Miotke

There’s an old saying: “May you live in interesting times.”

Some say that’s a curse, others a blessing. But however you look at it, 2021 was nothing if not interesting. The year saw the continuation of the coronavirus pandemic, soaring home prices and all sorts of weird market dynamics. Who could have guessed two years ago lumber would briefly become the new gold?

Last year, Inman described 2020 as the wildest year in recent memory. And it was truly unprecedented; when the outbreak first hit, it was unclear how long it would last or if the zombie apocalypse was nigh.

But 2021 was perhaps more weird than wild. All those things that made 2020 unusual were still in play, but there was a new sense of equilibrium this time around. In real estate, agents adapted. Many even pulled off personal bests. The tragedy of the outbreak continued, but for many the day to day was less about explosive news and more about the long haul. It was, in other words, interesting — in a way that perhaps no other year ever has been.

That of course means there was a massive amount of news as well. But here are the biggest and most significant trends that shaped 2021 and laid the foundation for the future.

Table of Contents

Acquisitions were big
Rivalries got hot
Market anxiety was initially a big deal
Consumer rage blew up
Agents broke bad
iBuying stumbled
The stock market took a wild ride
Regulators struck back
COVID-19 stuck around

Acquisitions were big

The year in acquisitions kicked off with a bang in February, when Zillow announced plans to buy ShowingTime. The news exploded across the real estate community — Inman’s piece on the deal was one of our most-read articles this year — with many agents expressing fear that Zillow would get access to their data.

Zillow had its defenders as well, and steadfastly insisted that it would leave ShowingTime’s privacy policies in place. But wherever people stood in the debate at the time, one thing was clear: The deal epitomized a trend in which big names joined forces via big money, polarizing the industry along the way.

That trend continued throughout 2021.

In April, for instance, CoStar announced plans to buy Homes.com for $156 million. CoStar is a major name in the real estate world, though the deal was perhaps less eye-catching to residential agents than Zillow’s big get a few months earlier in large part because CoStar has traditionally focused on commercial space. But it still showed that major companies were out there making big plays, and even more notably laid the groundwork for a dramatic rivalry that would explode later in the year (more on that below).

Another key chapter in the story of 2021 acquisitions unfolded in October when Coldwell Banker revealed plans to buy Warburg Realty. Warburg is a regional player, so the deal was less controversial within the national agent community — though several Warburg agents did quickly decamp for Compass — but it did highlight an ongoing trend toward consolidation in the brokerage space.

From left to right, Frederick Warburg Peters, Clelia Peters and M. Ryan Gorman announce Coldwell Banker’s acquisition of Warburg at the former company’s Gen Blue event in October. Credit: Coldwell Banker

Other significant moments include Compass buying a bunch of title companies, Lone Wolf buying nearly half a dozen proptech firms, and Houston-based title insurance company Stewart Information Services acquiring Coldwell Banker Bain.

And of course, we can’t leave out the fact that Inman itself was acquired in 2021 by private equity firm Beringer Capital.

Don’t beat yourself up if you missed some of these stories. There were so many acquisitions this year it was hard for anyone to keep up with them all. But that’s kind of the point: even in a broader period of consolidation, 2021 stands out for its high-profile deals.

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Rivalries got hot

Given all the jockeying for acquisition deals, it’s no surprise 2021 also saw some major drama. The biggest example of this unfolded gradually as CoStar CEO Andy Florance became increasingly willing to criticize Zillow. All the way back in January, Florance argued that Zillow is a competitor to real estate agents. And while he explicitly said CoStar and Zillow weren’t rivals, Florance also framed CoStar as an ally to agents — strongly suggesting a clash between the two companies.

By the second half of the year, Florance was throwing down the gauntlet. During Inman Connect Las Vegas, Florance, without explicitly naming any company, implied that Zillow “hijacks” agents’ listings. He also compared an unnamed company — which, again, was pretty obviously supposed to be Zillow — to the mafia. And during an earnings call, he ultimately compared the practices of Zillow-owned StreetEasy to blackmail.

Brad Inman, left, and Andy Florance on stage at Inman Connect Thursday. Credit: AJ Canaria of MoxiWorks

Florance wasn’t the only industry leader to take a shot at Zillow this year. In February, Keller Williams co-founder Gary Keller said during a company conference that writing a check to Zillow meant “you’re voting for a Zillow world.” And, he added, “this is a fight and there’s no way around it.”

Real estate executives rarely weigh in on rivals, so the commentary from Florance and Keller represented some of the most provocative pot stirring in recent memory.

In the case of CoStar, the comments also stemmed from actual business moves; following its acquisition of Homes.com, CoStar announced plans to launch a consumer-facing portal in New York City, which would bring it into direct competition with StreetEasy.

There was plenty more drama too.

Notable examples include several companies filing lawsuits against Compass over contracts and recruiting, further escalating Compass’ ongoing rivalry with much of the rest of the industry. And eXp Realty continued a recruiting streak during which it managed to lure away a host of teams from the legacy and indie spaces.

Speaking of rivalries and eXp, the company also drew the ire of financial guru Dave Ramsey, who in June kicked the brokerage’s agents out of his referral program.

Many of these rivalries lacked the colorful commentary of the CoStar-Zillow beef, but they show that 2021 was dominated by aggressive real estate firms crossing onto each other’s turf.

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Market anxiety was initially a big deal

It may be hard to remember at this point given the generally successful year real estate enjoyed, but the first months of 2021 actually saw a growing sense of anxiety about the housing market. Case in point: Inman’s most-read news story this year was a piece from mid April in which Fannie Mae and Freddie Mac predicted a slowdown.

Less than a month later, Inman published an opinion piece bearing the headline “the housing crash will be even worse than I predicted,” and it ultimately became our third most-read news piece of the year. Other stories about anxieties over low inventory and other slowdown-related topics also ended up being popular among Inman readers.

Stock trader Peter Tuchman works on the floor of the New York Stock Exchange. Credit: Spencer Platt and Getty Images

In the end the market didn’t crash. But its worth recalling that for several months in 2021, the future was quite uncertain.

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Consumer rage blew up

The real estate market didn’t crash in 2021, but it was still rough out there for some folks, particularly homebuyers in competitive markets. So it’s no surprise that there seemed to be a simmering sense of consumer rage about housing for much of the year.

Hints of that anger came through in news stories that suggested younger buyers — who now make up the majority of the market — were having a particularly hard time. By April, Inman had interviewed several people who were trying to buy homes and found they faced endless bidding wars and a generally demoralizing environment.

But the magnitude of consumers’ anger became more apparent in September when a Las Vegas real estate agent posted a video on TikTok accusing iBuyers of artificially inflating home prices. The video didn’t mention any companies by name, but seemed to imply that Zillow was to blame.

@seangotcher
#housing

♬ San Tropez – Illect Recordings

Zillow and Redfin, as well as numerous analysts, argued that no such thing was happening. But that didn’t stop the video from racking up millions of views and thousands of comments — most of them cheering on the attack on corporate homebuying. In the end, the video became a kind of rallying cry for consumers who felt powerful institutional buyers were blocking them out of the housing market.

It’s worth noting just how extreme and fast this swing toward anger was; back in February, Saturday Night Live aired a parody commercial comparing Zillow to porn for people over 30. The video was well received and generally cast Zillow as a fun and lovable website.

But by the time the TikTok iBuyer video went viral, Zillow was being framed as a sort of bogeyman for the housing industry. Which is to say, 2021 seems to have broken the spirit of some consumers and sent them on a crusade to find the villains making the housing market so brutal. Institutional buyers then found themselves in the crosshairs.

Zillow, of course, wasn’t the only target in this crusade. Just last week, The Daily Show aired a segment on why the housing market is so difficult for consumers. The first issue the segment identified was institutional buyers that snap up homes that might otherwise have gone to consumers.

The segment notes that big names such as Invitation Homes own more than 80,000 single-family rentals, but fails to point out that number is basically constant compared to the past several years.

The point is that while institutional buyers were certainly active in 2021, this year doesn’t appear to have necessarily been a standout in terms of that activity when compared to recent periods.

It wasn’t the year of the institutional buyer.

But the attention from outlets like The Daily Show and especially on platforms such as TikTok suggests it may have been the year of growing consumer awareness of, and rage toward, institutional buyers.

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Agents broke bad

Speaking of rage, there was also a surprising amount of misbehavior in the agent community.

This trend started right off the bat in 2021, when several agents joined the mob that stormed the U.S. Capitol Building. Among those who allegedly participated in the incident was Libby Andrews, an @properties agent who was promptly fired, Jenna Ryan, a Texas-based agent who ultimately received a 60-day jail sentence for her role, and Klete Keller, a former Olympic swimmer turned agent, who took a plea bargain with prosecutors in October.

Rioters storm the U.S. Capitol in Jan. 6, left, and Jenna Ryan at the event, right. Credit: Samuel Corum, Getty Images and Jenna Ryan

The Capitol rioters weren’t the only agents who got into legal trouble this year.

In October, Julian Werly — one of the top agents in the Las Vegas area — was charged with lighting his own home on fire. And this month, a judge sentenced Tamara Dadyan to more than 10 years in prison for her role in a scheme that diverted small-business COVID-19 relief funds to property down payments and luxury items.

Many other agents lost their jobs for misbehavior. They include California-based Mike Dalcin, who was caught hurling insults at an Asian-American woman on video, Chris Carlan, who touted a pandemic conspiracy theory on a billboard, and David Ferrugio, who used nude photos of himself to generate publicity for a listing.

More recently, this month Windermere attempted to distance itself from Montana-based pastor and Realtor Brandon Huber after he took an anti-LGBT stance. Huber is also facing a fine and expulsion from the Missoula Organization of Realtors, setting the National Association of Realtors up for what may be the first big test since it mandated a hate speech provision as part of its code of ethics last year.

Also this month, two groups of mortgage brokers got into a brawl in Atlantic City during the Triple Play Realtor Convention and Trade Expo.

Obviously not all of these transgressions are on par with each other. However, the takeaway isn’t just that a lot of agents were busted for misbehavior, but also that well-known companies have little appetite for agents who generate negative publicity. And as digital media seeps into every aspect of life and content lives forever on the internet, real estate firms appear to be sending the message that they want their agents to stay in their lane.

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iBuying stumbled

There were an array of stories related to iBuying in 2021, but let’s face it, the topic earned a place in this year-end review post because of one thing: The end of Zillow Offers.

Zillow announced the end of its iBuying efforts during an earnings report in November. The news was shocking because, up until that point, Zillow had been the second-largest iBuyer in the U.S., trailing only Opendoor.

Credit: Flo Pappert

Opendoor and other iBuyers including Offerpad and Redfin have indicated they will forge ahead, and that they continue to have a healthy handle on the market. But Zillow’s stumble — which it attributed to the risks and challenges of predicting the future prices of homes — was probably the biggest single development in the world of iBuying since the concept debuted. And not surprisingly, the news prompted a far-ranging debate on the future of both Zillow and iBuying more generally.

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The stock market took a wild ride

In addition to consumers, there was another group that had a rough go in 2021: Publicly traded real estate companies.

When the year began, it looked like it would be a good one for publicly traded real estate firms. Share prices were rising, and in February a host of real estate firms hit all-time highs. Zillow shares shot up to more than $200. Redfin shares went to nearly $100. Shares in eXp World Holdings, eXp Realty’s parent company, hit nearly $80. Other firms such as Realogy and RE/MAX didn’t hit all-time highs, but did see significant jumps.

But then shares in most real estate companies began falling. And despite some ups and downs, few have recovered to their late winter highs (Realogy is a notable exception). The year has been particularly punishing to tech-oriented firms like Compass, which as of this writing was trading shares for approximately half the price they debuted at earlier this year.

It’s not entirely clear why investors soured on so many real estate stocks, especially when many companies in the sector were posting strong earnings results. Likely contributing factors include concerns about interest rates, inventory and inflation. But whatever the causes, 2021 was the year that real estate stocks ultimately took a beating.

Compass co-founder and CEO Robert Reffkin, center right, at the New York Stock Exchange on April 1. Credit: Compass, Twitter

The rough ride is also especially notable given the flurry of real estate companies that joined the stock market in 2021. Compass debuted in April. Over the ensuing months Matterport, Offerpad, WeWork, Nextdoor and Vacasa all became publicly traded companies.

In the end, it was a banner year for real estate initial public offerings, if not for real estate share prices.

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Regulators struck back

Perhaps the dark horse candidate for the most significant story of the year was the ongoing feud between the U.S. Department of Justice (DOJ) and the National Association of Realtors (NAR). The conflict first emerged late last year, when the DOJ sued NAR over what it characterized as constraints on competition. At the time, the DOJ also announced a settlement and it seemed like a one and done thing.

But then in July the DOJ abandoned the settlement, reigniting the conflict with NAR. At the time, regulators said they were pulling out because NAR refused to modify the deal to protect the agency’s ability to investigate other NAR conduct.

For its part, NAR soon responded by trying to force the DOJ to stick with the original plan.

The case is just one of many fronts on which NAR is fighting. Others include ongoing antitrust lawsuits from homesellers and a homebuyer, as well as an antitrust case from discount brokerage REX Real Estate and private listing groups Top Agent Network and ThePLS.com.

These are all long and complex cases with many more chapters yet to come. But the takeaway is that this year saw increasing regulatory and legal pressure on the largest and most influential trade group in real estate. In response, NAR has launched a website to defend itself, and is already making a number of policy changes.

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COVID-19 stuck around

For a year that was entirely spent in a global pandemic, the most remarkable thing about COVID-19 in 2021 is how much it wasn’t the main story. There was really no moment in 2021 akin to March 2020, when it seemed like life as we knew it might legitimately end.

Masked travelers have their temperature taken. Credit: Betsy Joles and Getty Images

Instead, 2021 was weirder. It saw the spread of vaccinations and vaccine mandates, as well as vaccine hesitancy. The so-called Great Reshuffling — a phrase referring to migration away from pricey metros — continued. Labor and materials shortages persisted. New virus variants arose, raising the specter of ever-longer isolation rules. And in a twist no one could have imagined a year and a half ago, so many workers left their jobs that observers coined a new term: the Great Resignation.

In other words, the pandemic was rarely the main story on any given day. But it was constantly bubbling beneath the surface, coloring everything from market anxiety to consumer rage to Zillow’s iBuying troubles to agent misbehavior.

As of the time of this writing, COVID-19 had killed nearly 800,000 people in the U.S. By the time 2021 wraps, it will almost certainly have surpassed that grim milestone. It is, without a doubt, a tragedy on every level.

But it’s also not quite what anyone might have expected at the outset. This isn’t the Antonine Plague, the Black Death or even the Spanish Flu. It’s something unique to this moment, and that means going forward the future remains uncertain. In the same way that 2021 wasn’t what anyone anticipated back in 2020, next year is likely to be just as weird, unpredictable and interesting as any in our lifetimes.

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