Looking Back On 2023
[Editor’s Note: This is the introduction to our 275th Weekly Transmission, originally delivered direct to the inbox of the GEM Crystal on December 22nd, 2023. Below, myself and others from the GEM Diamond community look back on year with high interest rates, tighter VC wallets, lawsuits, and increased short term rental legislation. Many links included are to members-only articles, so won’t be accessible without an account already setup. You can read the full full article on our Crystal Platform.]
What a year, what a year. It’s all about the interest rates.
The 2023 macro was challenging, at best. It was a damn hard year all the way around. ❇️Reali ended in flames ❇️, as did Veev. WeWork lost its mojo, again. Opendoor’s missionary force stepped away. Those that survived are here to stay…for now. There’s no doubt 2024 will usher in another year of sleep-deprived founders.
Here’s a snapshot of the most notable industry dynamics that played out:
Mounting Lawsuits: There are $1.8 billion reasons that the Sitzer/Burnett trial in the U.S. District Court in Missouri has dominated the year’s news cycle. And, many more when you factor in the growing selection of follow-on lawsuits. Re-read that Sam Westelman essay thoroughly. Big changes are afoot, both for individual practitioners and MLSs—all of which will impact technology innovation and adoption.
AI-izing Everything: We don’t need to beat this drum since it’s beyond obvious, but you can’t go a day without hearing about the impacts of AI. That said, it’s still focused on the low-hanging fruit—largely still being used for data efficiencies, automating processes, and of course creating content.
Drying Up VC Funding: Fundraising was hard. Really hard. I heard that sentiment over and over from founders far and wide. BISNOW reports proptech funding was down 42%. Finding a VC actually putting money to work makes me think, “Where’s Waldo?” As Fast Company says, 2023 was a bloodbath for venture capital. Sure, AI is bucking the trend, but I’m not optimistic that will hold as AI becomes table stakes, like social media. “Overall IPO proceeds in 2023 lag[ged] 2022’s,” and the existing public stocks experienced steep declines since their pandemic highs—that needs to change to turnaround VC fuel. We’ll continue monitoring the public side via our Quarterly Earnings Radar and weekly ❇️Proptech Index updates❇️.
Mainstreaming ESG: With New York’s Local Law 97 requiring buildings over 25,000 square feet “to meet new energy efficiency and greenhouse gas emissions limits as of 2024” (with even stricter limits coming by 2030), and Washington approving legislation that makes it “cumbersome and expensive for [residential] builders to meet energy efficiency targets without installing heat pumps,” sustainability has moved front and center. This is only the beginning of governmental mandates that will further drive adoption of sustainability technologies previously seen as optional.
Boiling Over of CRE: The office sector is even worse than everyone says. Vacancies are up, transactions are down. With the cycle on commercial longer, fatigue in the market is real, and with tenants fighting to lower or abandon rents, the adoption challenges startups have always experienced are more of a reality than ever before.
Regulating Short-term Rentals: New York’s Local Law 18 took effect in September, which we touched on ❇️earlier this year❇️. The overlap of long/short-term rentals and Airbnb and all of that mushy gray area where new living arrangements are popping up for people. All of which bodes well for ❇️those facilitating home sharing, swaps, and exchanges❇️.
And, with that, let’s get to it…
Image created by: Dall-E-3
Prompt: “I’m writing a post about the real estate market titled Looking back at 2023, but am looking for a graphic for the top of the article. please make one and include either 2023 or 23”
REFLECTIONS ON 2023
How did we fare? Let’s take the time to reflect on, and score, the predictions and trends published a year ago.
Without further ado …
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