How Houzz is benefiting from the housing boom

Less than a year after laying off roughly 10% of its staff, Houzz is back on track and being buzzed about as a potential SPAC or IPO for 2021. The online platform for home design, with a community of more than 2.7 million home professionals, has seen a complete reversal of its business since the early days of the pandemic.

Co-founder and CEO Adi Tatarko, one of Yahoo Finance’s NEXT: 21 to watch in 2021, says there were a lot of “difficult decisions” made last year, but the work put in during the pandemic is paying off. “During this time, we developed more tools and technology,” she said. “And the software, which was part of the plan beforehand, really helped us because now ... there is much more demand.”

Houzz Pro — its newest offering, launched during the pandemic in April 2020 — is a subscription offering for remodeling and design professionals to run their businesses and connect with new clients. The segment showed promising growth early on with a 58% jump in U.S. project leads for home professionals last June.

“Home is a much more prominent thing, not just [a place] to get up in the morning and to go to sleep at night," she says of our changing relationship to where we live. "But also for work, for study, for many different things that before you didn’t think about your house this way.”

Along with her customers, Tatarko, who started Houzz with her husband in 2009, took on her own pandemic renovation project this year, turning a small nook near her kitchen into a cozy home office. "We didn't have a home office. You had to see us, how we were rotating from the backyard to the kitchen, to our bedroom. It was crazy. But two months in, my back was broken. And we said ‘Okay, we stabilize it. What do we do?’. And like many people around the world, Houzz came into play. We had to renovate a little bit and take care of our little spaces."

There's no place like Houzz

Tatarko is part of another larger trend driving growth at Houzz — one that predates the pandemic: “There is the large baby boomer generation planning to stay put and preparing their homes for retirement,” she notes.

While not a boomer, Tatarko is staying put in the house where Houzz was born. She says that's just one of the key trends, along with low interest rates, old housing stock and depleted inventory that is keeping the home renovation business hot.

Home sales recovered quickly in 2020 with annual sales activity reaching their highest levels since 2006. Inventory is incredibly tight with the number of homes for sale hitting an all-time low of 1.04 million in January, down 26% from a year ago. Tatarko expects these trends to continue and help Houzz capitalize on the convergence of home trends and technology.

In 2017, Houzz raised $400 million at a $4 billion valuation. Asked about an IPO in 2021, Tatarko gave no details, but said “stay tuned.”

“Different things can happen as you are growing the business and new opportunities come up. But again, it's not a goal by itself. It's always a specific moment that you get more partners ... or you're enabling more things to happen because of that."

Whatever happens, Houzz remains a labor of love for Tatarko, born out of an appreciation of design and a desire to streamline the often agonizing process of remodeling.

“You just follow your love and your passion. That's the only thing that can hold you for so many years,” she says. “At times, it's a roller coaster ... You want to really love what you do in order to be in that very long ride and enjoy it.”

Check out more of Yahoo Finance's THE NEXT 21: 21 to watch in 2021.

Jen Rogers is an anchor for Yahoo Finance Live. Follow her on Twitter @JenSaidIt.

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