Real estate today looks a lot like it did twenty years ago. Homeowners work with intermediaries like brokers and banks to connect with prospective buyers. New tech developments, however, are poised to change the real estate market.
In the past, the main technological innovations in real estate have been websites, which moved real estate listings online. But the real estate market today is especially ripe for disruption. Lack of affordable development, a slow and complicated buying process and a lack of transparency have all inspired startups to use new technology to radically change real estate.
Big data appraisal
Big data analytics — the use of software to analyze huge amounts of data — is being used to change how we buy and sell homes.
Using advanced analytics technology, it makes buying and selling homes as frictionless as possible. And with this model, a home-owner wanting to sell their house asks to have the property appraised. Then uses a combination of data, analytics software and a small team of appraisers to put a value on the property. Once priced, selling the house is as simple as clicking a button to accept the offer.
Blockchain-based real estate
Cryptocurrencies have radically changed our understanding of the possibilities for greater transparency and decentralization with currency. Blockchain may do the same for real estate.
In the future, it may become normal for the buying and selling of real estate to utilize blockchain. If two parties agree to transfer real estate using a blockchain-based platform, both the buyer and seller may be able to cut out intermediaries like brokers and banks. By communicating directly with the party they plan on selling to or buying from, both parties will save both on time and in fees.
Real estate is traditionally considered a highly illiquid asset due to the slow process of buying and selling it. With blockchain, this may change. Real estate, when treated as a token or cryptocurrency, can be readily traded from party to party.
With new blockchain-based platforms, information about the ownership — both past and present — of real estate properties traded on the network will be stored on the blockchain, and visible to every party that uses the network. This information could increase the confidence buyers and sellers have in the system and decrease the incidence of fraud.
Hi-tech affordable housing solutions
New startups are also helping the real estate industry adjust to the way that millennials and Gen Z are living. A full third of millennials still live at home. Most millennials that have moved out are renting instead of buying homes. Things don’t look better for Gen Z, who are expected to spend a substantial amount on rent.
This has presented a problem for traditional real estate companies. While there may be large amounts of housing available, there aren’t a lot of people who can afford it. Meanwhile, the development of affordable housing has slowed significantly.
At the moment, the real estate market is open to major disruption. New technology has made processes like valuation easier to automate than ever before. Difficulties like a major lack of affordable housing, the slowness of the buying and selling process and the current necessity of intermediaries are all problems that startups are hoping to take advantage of.