For most people, buying a home is the single largest transaction they will ever make.
Despite being such an important moment in one’s life, the real estate industry as a whole has been slow to recognize and implement customer demands which has caused a lot of frustration throughout the industry.
In the most recent years, as consumers demands have gotten louder, startups are recognizing the opportunity and jumping in to solve these problems. Knowing that these changes are taking place made us curious.
So, we asked the question:
What’s the future of real estate?
This is what we learned…
Jason Polancich, CEO & Founder of HomePocket
“10 to 15 years from now, real estate will be more of a technology-driven, eCommerce experience (e.g. Zappos, Amazon, or eBay) with agents performing very much reduced role still centered around paperwork and compliances (i.e. contracts, state laws, etc). Real estate is on the verge of a technology “watershed moment,” but it’s not quite there yet. Several things are holding it back, including the current generation of Realtors themselves, purposeful proliferation of traditional ways of the market, monolithic and controlling real estate market heavyweights such as the MLS system, Zillow and the big franchise chains (e.g. Century 21).”
“Real estate professionals with skills and knowledge of finance, investment, strategic planning and networking will survive the technological disruption:
– Over 70% of Millennial buyers/renters still prefer to hire a real estate professional.
– They expect agents/brokers to be their “trusted advisors”, bringing strategic thinking and creative insights along the way.
Slowdown in urbanization and growth in the homebuying markets in suburbs:
– Millennials tend to delay buying homes due to their struggling or unstable financial situation.
– Escalating cost of urban real estate will encourage first-time buyers to skip starter-homes.
– Buyers will focus on properties with more space and cheaper prices in suburbs and smaller cities/towns.”
Sissy Lappin, Co-Founder of ListingDoor
“Commissions will continue to drop making real estate agents disappear. Currently, 84% of all homes are sold with a discounted commission and from 2014 to 2015 agents income dropped over 15%. With over $1 billion dollars invested in 2016 to automate the process and 78% of all agents out of the business within 5 years, real estate agents might become a niche profession similar to travel agents. Oxford University did a study about the future of different careers and realtors had a 97% chance of elimination within 10 years.”
Chuck Hattemer, Co-founder & CMO at Onerent
“The future of real estate lies at the intersection of managed logistics and platform technologies that leverage artificial intelligence, data science, and mobile technology. Real estate really began it’s transformation when technology companies focused on unlocking information to empower consumers to make more informed purchase decisions–think Zillow, Trulia, etc. The second phase of real estate tech are companies offering utilities or tools on top of the existing real estate process and industry–think eSignature, CRMs or transaction management platforms. Today, we are getting the first glimpses into Real Estate’s future. The next phase is about transformative business models that completely redefine real estate acquisition and management from the ground up. Driven by technological advancements in logistics technology, AI, and data science, it’s now possible to scale boots-on-the-ground operations with robust back-office systems in real estate and offer a completely new customer experience to buy or rent real estate.”
Sepehr Niakan, Founder of Condoblackbook.com
“The broker-agent relationship as we know it will be all but gone. Agents will pick a real estate all-in-one mega-platform, possibly a virtual coach and a few Facebook groups that essentially act as collective-conscious mentors for agents. The Broker value will simply be experience, local market knowledge and connections. And the value won’t be at 50/50, 70/30 or even 80/20 split… Unless the Broker provides the tech platform and leads.
The agent-client relationship will follow suit, with a new generation of clients who will not perceive the agent’s experience, problem-solving, local market knowledge and connections as a big enough value anymore. Instead, they will rely on the one-two punch of artificial intelligence and big data to not only greatly simplify the search process, but to advise them on key aspects of the transaction. 7-day or possibly same-day loans will be here as well.”
Craig de Ridder, Partner at Pillsbury
“Emerging technologies are about to disrupt the Real Estate Industry by dramatically lowering costs, enhancing confidence in public land records, facilitating peer-to-peer transactions and automating processes. Blockchain, the technology underlying bitcoin, has been separated from the virtual currency and real estate pilots in the Netherlands, Cook County, and Tbilisi, Georgia are already demonstrating its potential to revolutionize digital databases and trusted business transactions. As all parties share a single, secure blockchain database to record everything transparently, smart contract functionality will significantly reduce the need for professional advisors. Identity management tools will allow individuals and companies to establish that they are reputable without further validation from institutional intermediaries. Artificial intelligence and the Internet of Things will also be very impactful and the changes coming could be more significant for global business than the invention of the internet. Established technology providers, including IBM and Microsoft, are deeply committed already.”
Ken Pederson, Branch Manager for Fairway Mortgage, PA
“The HUGE demographics that are and will be driving the Real Estate Market for the next 10 to 15 years, will be waning.
The Boomer generation will be settling into their forever homes, having been rampant market participants since the late 80’s and 90’s.
The Millennial generation, another giant demographic of buyers, will also be settled into their homes.
The market will be robust, however, trailing the years prior in what will turn out to be one of the best 10 year stretch of Real Estate sales the US has ever seen.
Home buyers with employment and OK to better credit will be receiving almost instantaneous mortgage approvals right from their smart phones.
Viewing homes will be even easier than it is today with the ability to see the entire home, every corner, without having to physically go see it.
That being said, we’re still talking homes and for many people, the largest financial decision of their life.
While the methodology will change with technology, APP’s and Artificial Intelligence (AI), people still want walk thrus allowing them to walk around homes, while buyers want real people to explain, guide, and help them make sound decisions.
Changes yes, yet at the same time, some things never change.”
Bruce Ailion, Realtor and Attorney for The Ailion Team
“Today the future is unknown. Real estate is a substantially tax-advantaged asset. We are facing the possibility of the largest tax reform legislation since 1986. The Tax Reform Act of 1986 was devastating to real estate. The future will not be known till tax policy and its impact on real estate. Ending or limiting the mortgage interest deduction, loss of federal flood insurance, changes in depreciation and the loss of the 1031 exchange provision will profoundly change the real estate landscape.
For the industry, technology will continue to be a factor that drives consolidation in companies and higher productivity from the top producing agents.”
Kimberly Smith, CEO of AvenueWest
“Real Estate in the future will not be a buy and sell industry – Real Estate will be a lifelong investment into an asset that will have a life cycle from private use, to investment to shared asset and back again.”
Brian Davis, Co-founder & the Lead Real Estate Blogger at SparkRental.com
“In 10-15 years, I believe we’ll see the following changes in the real estate industry:
- Most low- and middle-income homes will be sold through flat-fee online real estate brokerages. While traditional Realtors won’t be made obsolete, they’ll narrow to more specialty niches, such as selling unusual homes or working with investors.
- More buyers than ever before will buy long-distance, never having seen the property in person. Virtual reality will lead to virtual reality, as it becomes possible to interactively “walk through” a home, open closets and cupboards, etc. But VR can go even further, in helping buyers see what the light looks like at different times of day and year, and superimpose furniture, art or even home repairs.
- Rent collection will be completely automated. At SparkRental we’re about to launch a service that deducts the rent directly from the renter’s paycheck, for high-risk renters. For low-risk renters, we’ll be offering a platform where renters can pay their rent by credit card or bank transfer, and set up automated monthly payments. We’ll also report rent payments to the credit bureaus.”
Gary Lucido, President & Co-founder of Lucid Realty
“The writing is on the wall for the traditional real estate agent. They haven’t controlled the information in 15 years and they control less every day. Therefore, they deliver less value all the time. At the same time some agents make an exorbitant amount of money and others barely survive. Getting clients is the toughest part of the business, not doing deals. The acquisition of clients is increasingly dominated by online channels that sell the clients to agents. From the consumer’s perspective the ones that know what they are doing are subsidizing the ones that don’t and on average they are overpaying for what they are getting.
Commissions will come down or rebates will become commonplace. Perhaps more clients will pay realtors by the hour to end the subsidy problem (we have growing interest in this program). Agents will have to align themselves with teams or brokerages that provide them with clients since they will no longer be able to get clients by schmoozing.”
Bobby Goodman, Co-founder of Truss
“Technology, customization and flexibility will be the future of commercial real estate. In 10 – 15 years, commercial real estate leasing and sales will be an exchange marketplace fueled by technology. The lease and sale pricing will be completely automated based on factors like property and space condition, general real estate market trends, supply vs. demand metrics, property/ market/ submarket vacancy rate trends and recent transactions.
Virtual reality will give tenants, especially larger tenants flexibility and choice with the ability to design their space with a menu of options for construction, furniture, design, etc. By using VR to preview and make choices in advance tenants will be able to immediately determine the cost for office buildout and leverage technology that can determine pricing for materials and labor in real-time.
Lastly, there will be a growth in customization of lease terms. Landlord will meet smaller company tenants growing demand for short-term, flexible spaces. Landlords will pre-build spaces using moveable walls and demountable partitions, allowing tenants to quickly and cost effectively change the size or configuration of their space.”
Edward Seiler, Ph.D., Chief Housing Economist & Director of Mortgage Finance at Summit
“Looking back to my childhood, our house was cluttered with bulky items – TVs, stereo systems, rows of encyclopedias. Today, we have sleek flat screen TVs, recessed speakers and eBooks. Space galore. We increasingly live in smaller, energy efficient spaces, and still have room to maneuver.
Energy efficiency will continue outside. Our smaller homes will be closer together as America continues to urbanize. People will live nearer to their ideal location (yes, location will continue to matter), able to walk to schools, restaurants and shops.
Home ownership will continue to wane. Millennials and younger cohorts will value mobility, and the psychology of ownership will increasingly be replaced by an efficient rental (“sharing”) economy. Those who want to own will also benefit from efficiencies with easier sales transactions and financing options.
The central tenet of real estate – location, location, location – will be supported by increasingly efficient mobility and energy conscious living.”
Adham Sbeih, CEO & Principal of Socotra Capital
“Real estate will continue to be shaped by lifestyle, sustainability, and technology. There will continue to be a move to city centers, and a need for affordable dense housing near mass transit.
Most of the process for buying, financing, or renting real estate will be done through online platforms, as online venues will serve as efficient and effective ways to conduct transactions, and will reduce the necessity for human interaction with brokers and lenders.
As the Baby Boomers age, the VRBO and Airbnb market will grow even more as the last of that generation retires and hits their peak travel years, and properties benefitting from those websites will become even more lucrative.
Industrial buildings of 1,000,000 square feet or more will be built across the U.S. as online retailers look at ways to create same day delivery systems.”
Tim McMullen, Chief Executive of Luxury SF Realty
“The future of real estate:
– Virtual tours will expand to augmented + virtual reality tours with agents interacting with potential clients on a scalable level in interactive video form (think single player FPS video game story mode).
– Individual Agents will own niche digital social networks and media channels (think Facebook for niche population).
– Companies will lead in content creation (think Coldwell Banker becoming a news agency for a city).”