D2C Builder Welcome Homes Sees Niche Opportunity Amid Real Estate Turmoil

As homebuilding slows down, one D2C startup says it’s just finding its niche.

In an interview with PYMNTS, Alec Hartman, co-founder and CEO of direct-to-consumer (D2C) homebuilding site Welcome Homes, which recently announced a $29 million Series A funding round, spoke to the opportunity the company is taking advantage of. The company promises fixed-price newly built homes in a handful of styles, which can be purchased online in “a few clicks.”

“The markets’s different for each segment. In a certain way, you could say, ‘Ah, the world is on fire and interest rates are high,’” Hartman told PYMNTS. “There’s obviously drastic considerations for different segments of the market. But we’re not a giant. We’re not selling tens of thousands of homes, and we’re focusing on bringing value to smaller segments of customers at the moment.”

Hartman argued that, with this niche focus. the homebuilder benefits from being “at the right time” in the industry and in the market cycle. He stated that the company has been growing but did not cite specific figures.

When Hartman last spoke to PYMNTS in March 2021, the company was months out from its seed funding round. At the time, the company had launched with 25 properties in the New York-New Jersey-Connecticut area. Since then, the company has expanded its geographical reach to include the Washington, D.C. and Philadelphia metropolitan areas. Plus, Hartman noted, sales have grown “considerably” and the homebuilder has honed its value proposition, bolstered by positive feedback from customers.

“Construction is a very, very difficult period for most people who are building a home,” Hartman said. “I’d like to think that, from all the positive feedback we’ve got, that’s a big thing that we’ve been able to make a difference with.”

One of the lessons of the past two years for the company has been how complex homebuilding is from a technology standpoint, differing from location to location such that it is not possible to create one circuit-board-like template that can be applied to all geographies. Understanding this variability has been key to the company’s growth.

“The efficiencies that you get are supporting efficiencies rather than overriding ones,” Hartman noted.

Additionally, the company has also been looking to take advantage of the demand for homes as investments, soon to launch a product, supported by this latest injection of capital, that includes data-backed analytics and other tools for both individual and institutional investors looking to buy. Amid this rise in homes-as-investments, Hartman argued that homebuilders and those investors have a chance to play a role in transforming the housing market altogether.

“Investors constitute such a significant buying population for homes and that hasn’t really been the case in the past,” Hartman said. “The home as a more standardized asset class is something that is very notable. [The] next few years to next decade are going to be a very different housing world than we’ve seen before.”