#AIS: Divvy Homes CEO Adena Hefets breaks down the state of the US housing market

Homeownership matters less as shelter than as Americans’ most accessible leveraged wealth-building tool. Mortgages combine cheap leverage, forced principal repayment, tax advantages and asset appreciation; homeowners had roughly 75 times renters’ net worth, while the bottom half of households owned almost none of the stock market.

Housing affordability was being crushed simultaneously by higher prices, larger down payments and rising mortgage rates. Adina estimated every $10,000 increase in home prices excluded about one million families, while each one-point mortgage-rate increase excluded roughly five million; the share able to afford an average mortgage could fall below 15%.

The housing shortage originated partly in the financial crisis, when builders cut annual construction from about 1.5 million homes to 750,000 and never fully recovered. COVID then produced a demand shock after years of underbuilding, while permitting, regulation and supply-chain constraints made new supply unusually slow to respond.

Adina expected housing to cool much later and more slowly than financial markets, not repeat the 2008 collapse automatically. She expected supply and higher rates to restrain price growth over roughly 12–18 months, noting that housing bottomed in June 2012—about three years after stocks—because transactions, defaults and foreclosures move slowly.

Divvy was designed to substitute gradual equity accumulation for the down payment and underwriting barriers blocking would-be homeowners. Divvy buys the chosen house with cash, requires only 1–2% upfront, lets customers build ownership through monthly payments up to 10% over three years, then refinance into a mortgage or cash out.

Among Divvy customers reaching the end of the three-year term, 51% had bought back their homes, while roughly another 20% were being allowed more time to build equity. About 30% exited instead, and Adina said customers accumulated nearly 25 times the savings of an average renter through embedded home equity.

Divvy had raised a $200 million preemptive round from Tiger before the market turned, and Adina regarded taking abundant capital at low dilution as the rational move. By the interview, the company had about 300 employees, burned under $5 million monthly, and maintained an explicit “off-ramp” plan to reach cash-flow profitability if financing conditions worsened.

Former Fannie Mae COO Kimberly Johnson reportedly told Adina that government-backed mortgage institutions were deliberately reluctant to expand risk after the financial crisis. Adina said banks had become even more conservative through underwriting overlays, meaning meaningful credit expansion would likely require Fannie Mae itself to change incentives without threatening lenders with penalties.