Edmonton-based HonestDoor has secured $2.2 million CAD on its mission to improve the accuracy of property valuations in Canada.
With a platform that aggregates data from a variety of sources, HonestDoor has created a space where individuals can review and update home valuations online. It’s a model that is widely available within British Columbia, Alberta, and Manitoba, with the startup looking to become the go-to site for home valuations across Canada.
“HonestDoor turned real estate pricing into a science and uses data to remove the human bias.”
HonestDoor’s national agenda comes amid a hot housing market that has seen prices soar, a shortage in availability, and bidding wars.
“HonestDoor turned real estate pricing into a science and uses data to remove the human bias,” said Luge Capital co-founder and General Partner David Nault, whose firm led the seed round.
“In Canada, there was no place for real estate data,” said Daniel Belostotsky, co-founder and CEO of HonestDoor. “There’s not really one site that had anything. And if you went to a listing site, the big difference is the listing sites would have information about listed properties, but they wouldn’t have information on anything else.”
HonestDoor is looking to use the capital to make it possible to get on-demand valuations on any property in Canada, and has plans to test the model in select American markets.
The round brings the startup’s total funding to date to $2.7 million after its secured initial capital in early 2020.
In addition to bringing on new investor Luge, Honest Door saw participation from a mix of new and return investors. New investors included Reach Canada, the accelerator of Second Century Ventures, an early-stage technology fund backed by the National Association of Realtors, as HonestDoor took part in the program. Notable Alberta-based Wheaton Group, which has touchpoints in finance, automotive, and airlines, also joined as a first-time investor.
Return investors Bluesky Equities, Conconi Growth Partners, Panache Ventures, SAF Group, and Startup TNT also took part, alongside angel investors Sanders Lee (of real estate group Hopewell), Ashif Mawji (Rising Tide VC), and Blaine LaBonte (Cougar Drilling Solutions).
The idea of providing online home valuations is not a new one. In the United States (US), major real estate listing platform Zillow offers Zestimates, a tool for seeing how much homes are worth. Closer to home, Properly, which has become a major digital real estate player also offers an estimate tool.
While in Canada consumers can also find valuation estimation tools on financial institution and realtor websites, startups looking to innovate in the space are more prominent in the US. Luge’s Nault argues this is because of access to data. “In the US, significant data about real estate is readily available but in Canada it’s another ballgame,” said Nault. “Data and insights on real estate are not readily available and there is a lack of transparency.”
HonestDoor aggregates data from local sources, such as municipalities that hold property data, but also allows users to submit information. The idea behind the latter is to improve the accuracy of the valuations. HonestDoor users are allowed to submit things like before and after pictures of renovations, appraisal reports, and purchase contracts. Belostotsky noted that, to date, 20,000 users have submitted data to the site.
This type of information can be especially useful in a day and age when home buyers are in a competitive market that is forcing them to waive home inspections. It’s also a way for homeowners to improve their valuations, Belostotsky argued.
“The HonestDoor solution is a win-win for everyone in the chain from the seller to the buyer and from the real estate agent to the lender,” Nault told BetaKit. “We invested in HonestDoor because it is a natural fit with the growth of digital mortgages, insurance and real estate shopping.”
Belostotsky explained that one of the reasons he created HonestDoor is because he felt consumers should have access to this kind and level of information online. “Transparency for all rather than transparency for some,” he called it.
HonestDoor was first launched in early 2019 after Belostotsky was working as a venture partner at Panache. He joined the venture firm in 2018 to help establish its presence in the city. Belostotsky also runs his own boutique investment firm, Otto Capital, which he created after he founded his first company out of university and used the money from its sale to invest in real estate.
He launched HonestDoor (alongside Macgyver Ussher) after buying his own properties for years and realizing that access to data wasn’t widely accessible to the public.
Having built out its presence in Western Canada for the last few years, HonestDoor is ready to take on Canada, and the US. Belostotsky said HonestDoor has “aggressive” geographic goals for Canada during this next quarter.
The CEO also pointed to the potential to add real estate listings to HoenstDoor, arguing that the startup’s data would be its differentiator.
“Most of the data providers work with business clients, and they don’t really work with consumers,” said Belostotsky. “Our angle is different … we’re going to find, collect, and we’re going to use our own models to come up with the best HonestDoor prices in the country. And then we’re just going to share it with consumers, and we want … the whole country to be on our site.”
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Robert McLister: Tax shelters don’t make housing more affordable, but those with the cash would be foolish not to use them
Published Apr 19, 2024 • Last updated 55 minutes ago • 4 minute read
With housing unaffordability near its worst-ever level, our trusty leaders are on a quest to right their housing wrongs and get more young people into homes.
Part of Ottawa’s big strategy to “help” is promoting tax-sheltered savings accounts and pumping up their contribution limits. That, of course, stimulates real estate demand amidst Canada’s population and housing supply crises. But save that thought.
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First-time buyers now have three government piggy banks to stockpile cash for a down payment:
1. The 32-year-old RRSP Home Buyers’ Plan — which lets you deduct contributions from your income to defer taxes and then borrow from the account interest-free for your down payment (as long as you wait 90-plus days to withdraw any contributions);
2. The 15-year-old Tax-free Savings Account (TFSA) — which lets you save after-tax dollars, grow your money tax-free and withdraw it without the taxman taking a bite;
3. The one-year-old First Home Savings Account (FHSA) — which is a combination of an RRSP and TFSA. It lets you deduct contributions from income, compound it tax-free and never pay tax on withdrawals used to buy a home. You can even save the deduction for a year when you need it more — when you’re earning more money.
Assuming you have the funds and contribution room, these tax shelters can combine to help you amass a supersized down payment.
“Looking at the FHSA alone, with the max annual contribution room of $8,000 for 2023 and 2024, a potential first-time home buyer could have as much as $16,000 deposited in the account today for a down payment,” says Eric Larocque, chief mortgage operations officer at Questrade’s Community Trust Company.
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“If you also add in the cumulative contribution room of $95,000 for the TFSA, it amounts to $111,000 in potential funds available — and that’s before incorporating investment gains from either account.”
And it doesn’t stop there. RRSP, TFSA and FHSA savings limits keep increasing. If first-timers have enough contribution room, down payment savers in 2024 can sock away even more in these tax-sheltered troves.
“Factoring in the recent changes to the Home Buyers’ Plan, which now permits RRSP withdrawals of up to $60,000 — up from $35,000 — we land at a potential total of $171,000 in deposited funds that can be tapped for a first-time home buyer’s down payment,” Larocque adds.
That’s quite a wad — easily enough to cover the 20 per cent ($139,706) down payment required to avoid mandatory (and pricey) default insurance on the average home. Canada’s average abode is now worth $698,530 by the way, according to the Canadian Real Estate Association.
Here’s the rub: Canada’s living costs are sky-high, and real disposable income has trended downward. So, how’s an average first-time buyer household, raking in less than six figures, supposed to amass such a stash?
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Based on national averages, saving 10 per cent of one’s pre-tax income per year (who does that?) would take a young FTB couple over 15 years to sock away $140,000. History shows what would happen to home values if you waited 15 years — they’d jet off without you.
If you have no other resources and your bet is that historical appreciation rates continue — despite slower population growth, more building and potentially higher long-term rates — you’re better off saving less and buying sooner with a five per cent down insured mortgage.
So, does Big Brother really expect your typical first-time buyer to max out all these savings plans? Nope. But hey, throwing a buffet of options at you sure paints a pretty picture of government effort, doesn’t it?
Ottawa’s dirty little secret is that these nifty programs crank up demand, turning renters into buyers. So don’t bet on them making the home-owning dream any cheaper, for first-timers or anyone else.
Take advantage of them anyway.
The government sets limits on these tax shelters with well-off home buyers in mind. One lucky bunch who can make use of all three down payment savings plans is the first-timer with prosperous parents.
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Such buyers can make a withdrawal from their parental ATM (a living inheritance, some call it), deposit that cash in all three savings vehicles above and reap: hefty income tax savings or deferrals (thanks to the FHSA and RRSP deductions); tax-free/tax-deferred growth on the investments; and tax-free withdrawals if the money is used to buy a qualifying home (albeit, you’ll have to pay the RRSP HBP back over 15 years, starting five years after your withdrawal).
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The more opportunities it gives people to save for a down payment, the more Ottawa worsens the imbalance between purchase demand and supply. And that, of course, boosts real estate values skyward — which is dandy for existing owners but contradictory to the government’s affordability messaging.
But hey, these tax treats are ripe for the picking. Home shoppers with the means — especially those with deep-pocketed parents — might as well take advantage of all three accounts.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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Successful real estate investors have long followed the adage: When there is blood in the street, buy property.
Historically, this approach has yielded dividends, and it explains the mindset behind a new venture from Hines, a real estate giant with over $93 billion in assets under management. Hines recently announced a new platform called Hines Private Wealth Solutions that seeks to capitalize on the recent troubles in the real estate industry.
The management at Hines has been carefully watching the real estate industry for decades, and they believe that today’s market presents the perfect opportunity for investors to buy distressed assets and sell them at a profit in the future. When you consider that nearly $4 trillion in commercial real estate loans are set to mature between now and 2027, it’s easy to see the logic behind Hines Private Wealth Solutions.
The developers behind many of those projects took out loans assuming they would be able to refinance at pre-COVID interest rates. Considering that current interest rates are about double what they were before COVID-19, that assumption looks more like a losing bet every day. It also means there will be a lot of foreclosures that a well-positioned fund can snap up for pennies on the dollar.
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That’s where Hines Private Wealth Solutions seeks to step into the picture. It’s already contracted with investing heavyweight Paul Ferraro, former head of Carlyle Private Wealth Group, and raised $10 billion in funds for the new project. It will offer its clients a range of investment options, including:
In addition to these offerings, Hines will also give personal guidance to its investors on how to best manage their real estate assets. It is targeting investors who want to turn away from the traditional 60/40 investment model by channeling more money into real estate and away from other alternative investments. Hines is banking on the idea that high interest rates and high inflation will be around for a while.
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When that happens, it becomes more important for investors to hold inflation-resistant assets. That’s a big part of why Hines is betting that real estate is near the bottom after years of declining profits resulting from high interest rates and major losses in the commercial sector. Hines’s conclusion that now is the time to buy real estate is based on long-term company research showing that real estate typically declines after a 15- to 17-year-long growth period.
Its research shows that the decline normally lasts around two years, which is about the same length of time the real estate market has been suffering from high prices and high interest rates. Theoretically, that makes this the perfect time to make aggressive moves in the real estate market, and the Hines Private Wealth Fund was conceived to allow investors to take advantage of current market conditions.
Despite the deep troubles facing today’s real estate industry, it’s not hard to see the logic in Hines’s approach.
“This is a great vintage, it’s a great moment. This real estate correction began really over two years ago, right when the Fed started raising interest rates,” Hines global Chief Investment Officer David Steinbach told Fortune magazine. “So, we’re two years into a cycle, which means we’re near the end.”
If Hines is correct, real estate investors will have a lot of good bargains with high upside to choose from in the next 12 to 24 months. The good news is that even if you’re not wealthy enough to buy into the Hines Private Wealth Solution, there may still be plenty of opportunity for you to adopt their investment philosophy and start scouting for an undervalued, distressed asset to scoop up. Keep your eyes open and be ready.
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This article $93 Billion Real Estate Giant Is Betting The Market Is About To Hit Rock Bottom originally appeared on Benzinga.com
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