Key takeaways

• Homeownership plays a crucial role in community engagement and can lead to better life outcomes for individuals.
• Delayed homeownership among young people may impact wealth transfer and community stability in the long term.
• Rising transaction costs in home buying have significantly reduced housing availability.
• Increasing liquidity in the housing market can encourage more transactions, similar to other sectors like the car market.
• The cost of housing has increased disproportionately compared to income, making homeownership less accessible.
• Larger asset sizes should theoretically lead to lower transaction friction and more efficient market clearing.
• The iBuying model, despite criticisms, has shown economic viability when managed correctly.
• Opendoor is integrating AI into mortgage products to revolutionize the home buying and selling process.
• Traditional underwriting methods in the mortgage industry are considered outdated and in need of modernization.
• Opendoor’s approach could significantly reduce the time required to fund a mortgage, enhancing efficiency.
• The integration of AI in mortgage processes could eliminate the need for human interaction in home buying.
• Delayed homeownership trends among younger generations could affect long-term economic and social structures.
• Increased transaction costs since 1990 have had a substantial impact on housing supply and affordability.

Guest intro

Kaz Nejatian is the Chief Executive Officer of Opendoor Technologies Inc. He previously served as Chief Operating Officer and VP of Product at Shopify, where he scaled product and operations at a major commerce platform. Kaz also held product leadership roles at Meta and founded Kash, a mobile payments company acquired by a leading US fintech in 2017.

The impact of homeownership on community and individual outcomes

• When you own your home you own a share in the future of your community… kids that grow up in a home that their parents own have better life outcomes.

  — Kaz Nejatian

• Homeownership is linked to stronger community ties and improved life outcomes for children.
• The stability provided by homeownership can lead to increased community engagement.

• Homeownership significantly impacts community engagement and individual life outcomes.

  — Kaz Nejatian

• The social implications of homeownership extend beyond the individual to the broader community.
• Owning a home can provide a sense of investment in the community’s future.
• The benefits of homeownership are not just financial but also social and communal.
• Understanding the relationship between homeownership and community stability is crucial for policymakers.

Delayed homeownership and its economic implications

• For the first time in American history young people are buying their first home on average after they turn 40… wealth transfer in America primarily happens through homeownership.

  — Kaz Nejatian

• Delayed homeownership among young people could disrupt traditional wealth transfer methods.
• The trend of buying homes later in life may affect community dynamics and stability.
• Economic and social consequences of delayed homeownership need to be addressed.
• The shift in homeownership age could lead to changes in wealth distribution patterns.
• Understanding current trends in homeownership is essential for predicting future economic impacts.
• Delayed homeownership may lead to a reevaluation of how wealth is transferred across generations.
• The long-term effects of this trend could reshape the housing market and community structures.

Rising transaction costs in real estate

• If we just get rid of that 10% and go back to what the transaction costs would have been in 1990 it’s the equivalent of creating 5,000,000 new homes in America and there’s no plan to create 5,000,000 new homes anywhere.

  — Kaz Nejatian

• Increased transaction costs have significantly impacted housing availability.
• Reducing transaction costs could have a substantial effect on the housing market.
• Historical context of transaction costs is crucial for understanding current market challenges.
• Rising costs have created economic barriers to homeownership for many.
• The economic implications of transaction costs extend beyond individual buyers to the broader market.
• Addressing transaction costs could lead to increased housing availability and affordability.
• Policymakers need to consider transaction costs in housing market reforms.

Market liquidity and consumer behavior

• It’s almost like by adding liquidity to the market people should want to transact more… when you added liquidity to car market people bought more cars.

  — Kaz Nejatian

• Increased market liquidity can lead to higher transaction volumes.
• Liquidity affects consumer behavior across various sectors, including real estate.
• Understanding liquidity’s impact on the market is essential for predicting consumer trends.
• The relationship between liquidity and transactions is a key economic principle.
• Liquidity can drive market activity and influence buying decisions.
• The housing market could benefit from increased liquidity to stimulate transactions.
• Liquidity’s role in the market highlights the need for policies that enhance market efficiency.

Housing costs versus income trends

• The cost of housing because of the friction has gone disproportionately high while mortgage rates have come down.

  — Kaz Nejatian

• Housing costs have risen faster than income, affecting affordability.
• The disconnect between income and housing costs is a critical market issue.
• Rising housing costs create barriers to homeownership for many individuals.
• Understanding historical trends in housing costs is essential for addressing affordability.
• The economic implications of rising costs extend to broader market dynamics.
• Policymakers need to address the income-housing cost gap to improve accessibility.
• The affordability crisis requires comprehensive solutions to balance costs and income.

Asset size and transaction efficiency

• The fact that asset high size is high means friction should be lower because market should clear more easily.

  — Kaz Nejatian

• Larger asset sizes should lead to lower transaction friction in the market.
• The relationship between asset size and efficiency is a key economic principle.
• Understanding asset size’s impact on transactions is crucial for market analysis.
• Larger assets can facilitate more efficient market clearing and reduce friction.
• The housing market could benefit from policies that enhance transaction efficiency.
• Asset size plays a significant role in determining market behavior and efficiency.
• Policymakers need to consider asset size in market reforms to enhance efficiency.

The viability of the iBuying model

• They’re just wrong about the math… if you ignore the era of poor management decisions opendoor was uneconomic positive on its core i buying model for most of its life.

  — Kaz Nejatian

• Criticisms of the iBuying model may overlook its economic viability.
• The iBuying model has shown positive economic performance when managed correctly.
• Understanding the iBuying model’s economics is crucial for evaluating its viability.
• The model’s success depends on effective management and strategic decisions.
• The iBuying model could play a significant role in the future of real estate transactions.
• Critics need to consider the model’s historical performance in assessing its viability.
• The iBuying model’s potential impact on the market highlights the need for informed analysis.

Integrating AI into mortgage products

• We’re gonna build the first AI native mortgage product… you’ll be able to buy a home and get a mortgage without talking to a human being.

  — Kaz Nejatian

• Opendoor is leveraging AI to streamline the mortgage process.
• AI integration could revolutionize traditional mortgage practices.
• The use of AI in mortgages could eliminate the need for human interaction in transactions.
• Understanding AI’s role in financial services is crucial for predicting industry trends.
• The integration of AI could enhance efficiency and reduce costs in the mortgage process.
• AI’s potential to transform the mortgage industry highlights the need for technological adaptation.
• Opendoor’s approach could set a precedent for future innovations in real estate.

The need for modernization in underwriting

• I think traditional underwriting is just deeply flawed and deeply broken.

  — Kaz Nejatian

• Traditional underwriting methods are considered outdated and in need of change.
• Modernizing underwriting practices could improve the mortgage industry’s efficiency.
• Understanding current underwriting limitations is crucial for industry reform.
• The need for modernization reflects broader trends in financial services.
• The mortgage industry could benefit from adopting innovative underwriting practices.
• Policymakers need to address underwriting flaws to enhance market efficiency.
• The call for modernization highlights the industry’s need for technological advancement.

Reducing mortgage funding timelines

• If we run our own mortgage business that month can go down to eight days… we can buy your house give you a mortgage and the entire thing can be done in days rather than months.

  — Kaz Nejatian

• Opendoor aims to significantly reduce mortgage funding timelines.
• Shortening funding timelines could enhance efficiency and reduce costs in real estate transactions.
• Understanding traditional mortgage processes is crucial for evaluating Opendoor’s approach.
• The potential to disrupt traditional processes highlights the need for innovation in real estate.
• Reducing timelines could improve the home buying experience for consumers.
• Opendoor’s approach could set a new standard for efficiency in the mortgage industry.
• The focus on reducing timelines reflects broader trends towards efficiency in financial services.