Technological advancements have a tendency to rapidly change industries. This is a precedent that could not be applied to the real estate industry until very recently. Mainly due to the rising influence of millennials, as well as a growing number of real estate tech investments, the industry as we know it is undergoing massive change – and it will look very different in the near future.
For example, given the U.S. real estate industry alone is a $35 trillion asset class, and represents a multi-faceted market generating over $1 trillion in revenue annually, according to IBISWorld Industry Reports, the strong interest in companies built to serve, disrupt and compete within it is not surprising.
Real estate technology is on the rise
Simply put, the internet has reshaped the way in which real estate is delivered to the customer. For example, the National Association of Realtors states that 95 percent of customers search for real estate online with a record 51 percent who find their ideal home that way. This means the internet continues to stand as one of the most popular resources for home buyers.
Additionally, the ever-growing real estate market is also impacted by major trends like its expansion into mobile technology. On one hand, numerous older-generation real estate businesses find it difficult to adapt to how younger generations communicate. On the other, younger and more agile real estate companies have witnessed technology-based improvements in their administrative tasks and business processes. All real estate brokers really need these days is a tablet or smartphone with an internet connection and they can do more from outside the office.
Social platforms are another major hub of activity for many real estate businesses. The thing about social media is – it is inherently relational. This makes it very simple and lucrative for estate agents to stay competitive, connected and leverage online relationships to generate leads and sales. Social media plays a vital role in these strategies. Many businesses have Twitter, Facebook, Pinterest or YouTube accounts and use them to share content (news, market reports, etc.), generate business and promote agents.
Real estate expectations and customization
Two things that characterize millennials as a generation is their drive for personal actualization and high purchase expectations. These pursuits extend to the home as well, and explains why providing top-tier amenities in new housing construction and developments has increasingly come into the focus.
There is a growing demand for walkable neighborhoods with entertainment options, food and local shopping. Simply put, millennials have a passion for the suburb experience.
As a result, both traditional and emerging real estate investments are experiencing significant competition and market growth, both of which are driven by the aforementioned increase in consumer expectations. A good example is the growing number of competitors like vacation rental marketplaces like HomeAway and VRBO (another HomeAway brand) that are swiftly gaining popularity with consumers despite the fact that AirBnB was among the first to the scene.
In other words, if you are interested in learning just how much potential technology brings to the real estate market, simply observe the increase in brands seeking to do business in it. You’ll undoubtedly come to the same conclusion: technology truly is reshaping the real estate industry. Meanwhile, it is opening up real estate to new demographics by providing an efficient and potent mix of data, access and expertise.
Predictive analytics drive short-term rental investing
Today’s real estate investors don’t look solely at the price of a property. Factors like return on investment, cash on cash return, cash flow and cap rate are important because these metrics help investors make informed decisions. Similar to buying a stock – intelligent and actionable data (e.g. dividend, price/earnings ratio, market cap, etc.) is required for successful decision making.
The need for resources that help investors make data-driven decisions is growing as a result of increasing interest in short term rental properties. In order to access this kind of data one would have to be a seasoned real estate expert. That is exactly where predictive analytics comes in and transforms the real estate market.
It takes a lot of work to compile historical data, trends and predictions for the future in a way that is useful for potential investors. The situation is further complicated when individual investors try to access data on short-term rent potential.
Real estate search engines powered by predictive analytics (i.e. online marketplaces that leverage data to help people find properties based on certain criteria) provide accessible and highly customized data. Thus they are quickly gaining popularity
Technology is not just reshaping real estate; it’s revolutionizing it. In real time.
As the Founder of New Street, Robert Jendrzejczak is passionate about optimizing the customer experience. He is a stickler for real-world business results. Robert has developed deep insights into the market and an insider perspective of what homebuyers are looking for these days. When he’s not helping New Street clients, he’s probably catching a run while purposefully ignoring the stop signs. Connect with @newstreetrt on Twitter.