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

**Adena Hefets** (0:00)
Awesome. Hi everyone. My name is Adina. I'm the CEO of Divvy Homes. It's a pleasure to meet y'all.
Thanks for watching! All right. So while they're pulling that up, I will just kick it off and get started, because we're about three hours behind at this point. My passions are at the crossroads of finance, housing, and inequality, and trying to solve all of these. I'll get into what my company does at the very end of the presentation. That's not what I really want to focus on. But I want to start off with a little story that I think explains why this is so important to me.
When it was about the 1980s, my mom decided to go on a little road trip with her friends, and she was in Israel, and she was backpacking, and she was hitchhiking, and a man picked her up.
She got into that car, fell in love, and got pregnant. That man is my dad. My mom and dad quickly got married, immigrated back to the US, and found themselves very young, 21 and 24, pregnant, and trying to figure out what they were going to do with their life. They couldn't get a mortgage to buy a house and settle down, and be able to raise a family, but they were fortunate enough to find a woman who gave them seller financing on their house. So, this woman financed the purchase of the house to let my parents pay an installment. In that house, they had three additional kids, I'm the third of four, and then eventually were able to get a mortgage, take cash out of that house, and use the cash that they took out to pay for all four kids to go to college. I tell you this because to me, this is the heart of the American dream, which is being able to provide a better life for your children than what you actually have. And so so much of what we're going to be talking about here is why that American dream has disappeared for so many Americans and what we at Divvy are doing to try to address that. So let's dive in. I have these bright blue slides. The goal is to just give you the takeaway so you don't have to figure it out. I try to stick to one chart per slide to keep it super simple and I'll explain it, but this is the takeaway that you should get from the next couple of data points I'm going to give you, which is wealth inequality is rising across America.
I think y'all know this chart, which is that 99 percent of wealth is owned by the top 50 percent and the bottom 50 percent only owned 1 percent of wealth here in the United States. So this chart shows distribution of wealth by what your household income is. So the top 10 percent of owners, sorry, the top 10 percent owned 76 percent of wealth, the next 40 percent owned 23 percent of wealth. If you sum that up, 99 percent of wealth is owned by the top 50 percent.
And what's even more interesting is that the rich are getting richer, while the poor kind of stay at the same level of income. And so what this chart actually shows is income percentile. So on the x-axis, the zero is if you're at the very bottom end of the income spectrum, 100 percent, you're at the top end. And then the blue line is how much income or family household wealth you had in 1963, almost 50 years ago. And the yellow line shows how much wealth you have today. So if you were in the top 1 percent, your household wealth was on average $2 million 50 years ago. Today it's about $10 million or a 5x growth. And if you were in the bottom 50th percentile, you haven't seen your household income change almost at all.
And so you might be asking, okay, why is this the case? Is it that wealthy people are making more in salary? I would say while there are some salary differentials, the main driver is asset appreciation, access to assets. And when I say assets, I'm going to use that pretty liberally. It can mean stocks, it can mean housing, it can mean small businesses, direct investments, but all of that, I'm going to group together as investments in assets. And so you can see this is a really simple chart where I took, what were the 20-year returns by income as well as asset? And you can see that household income has not appreciated much in the last 20 years, whereas the S&P 500, as well as if you owned equity in your home, you'd see an increase in your value of over 100 percent. You want to see something even crazier? You get leverage on your home equity, which is something that most of you, some of you might get leverage against your equity, that you messed in the stock market, but most of you aren't. You can actually lever up your home equity, right? And so you can take out debt that's cheap because it's backed and guaranteed by the government. Eighty percent leverage at what has been almost three percent cost of capital. No one else can get that sort of cost of capital at that sort of leverage.