By Harrison Heaton
The world progresses whether you like it or not, and advancing with it is absolutely vital when it comes to being successful and keeping up with the competition. The real estate market was considered a slow growth industry when it came to new developments in which sticking with the old in person transactions and building client relationships was a face to face ordeal. However, even though they still are lagging behind other sectors, the real estate market has taken strides from where it was 10 years ago, and it continues to make progress towards automation and efficiency.
Now, with this being said, technological advancements have entered the metaphorical chat room for the real estate market and has allowed for the speed of transactions to quicken and the ability to have information readily available at your fingertips. According to The 2021 NAR Home Buyer and Seller Generational Trends report, almost 50% of all homebuyers look online for listings and different property types for sale before advancing their further actions. Therefore, if you are able to take advantage of making it less costly in terms of time, money, opportunity cost, etc. through technology then it is a win-win for both parties.
I want to openly talk about a few of the new innovations that have contributed to the overall well being of the healthy real estate market, especially prevalent during the Covid-19 pandemic. First, the incorporation of 3D house and apartment tours have made looking at houses less costly and has enabled prospective buyers to no longer spend a great amount of time and money setting tours up to view the home. Of course, agreeing that buyers will likely want to see the home in person before signing the dotted line, these virtual house tours have allowed for extremely accurate portrayals of the condition, fixtures, space, etc. and overall gives you a solid POV experience from the comfort of your couch. Going hand and hand with this phenomenon, the introduction of drone utilization is huge. Drones are now being used to capture aerial photos of the house, the surroundings around it, the proximity of other houses or stores near you, and an overall photo into the community and neighborhood you are potentially becoming a part of. It benefits the real estate industry, but also provides mostly the younger generations a pathway to get their foot in the door and potentially start this small step towards a bigger career.
Another development which may sound confusing when I first introduced the concept is the blockchain. I already know what you are thinking, and yes it is the same tool that the cryptocurrency market is run off of. However, blockchain has many more numerous applications that can be derived from it especially in the real estate market. This technology can be used to verify some transactions that need to be encrypted, so that no one can tamper with these financial transactions online. This is vital when it comes to the fractional investing of properties. It allows financial transactions, property documents, ownership rights, etc. all to be filled accordingly and secure through the blockchain. This goes hand and hand with the growing utilization of the concept I mentioned above known as fractional investing. More and more people especially Millennials and younger generations have begun to focus on property investing but with a varying set amount of partners going in on it with them. Due to the deadliest virus in modern day society, Covid-19 has forced the FED to reduce the interest rate making it cheaper to borrow money. This fact, alongside demand far exceeding supply in the housing market, once again because it is cheaper to obtain debt through loans and mortgages, has led to housing prices skyrocketing. Due to the housing prices increasing about 16% through the last year, and the market showing no signs of cooling down in the recent past, investors began to start tackling the purchasing of these homes with other investors. Making it less burdensome for an individual investor and sharing the risk and the reward with others. This not only contributes to the investor, but also the homeowner. Due to this concept gaining traction and becoming increasingly popular, there is increased competition. With this increased competition, these investors are more likely to purchase the home for the asking price, if not more. Therefore, the investors obtain their property and likely will split the income from renting it out, diversifying their portfolio, and the homeowner gets what they want from their home.
Applications that appeal to the real estate market are obviously beneficial to the industry. However, there are new concepts that have been appealing to younger generations and contributing to a new culture of mobile living and price efficiency. Tiny homes have been gaining traction in the market and have a side to them that makes it a decent investment and a financially responsible endeavor. There is an increasing social movement or momentum that has younger people thinking about the possibility of living their life never in a stable location. Living wherever their travels take them has had a sudden urge in expansions since the beginning of the pandemic. According to one survey conducted by Fidelity National Financial Subsidiary IPX1031, 56% of American respondents reported that they would consider living in a tiny home, and another survey of individuals that were not homeowners yet, 86% said they would contemplate it as their first home. Eco-friendliness, efficiency, affordability, and minimalism are the attributes that make tiny homes so appealing to those that might not want to be settled down in one place for too long.
These tiny homes are not just an intelligent alternative to living, but also can be huge money makers when utilized as investment properties. There has been a rush of people using Airbnb, or Vrbo during vacations or temporary stays such as business trips, etc. and these property owners are making a good living just off the daily rate to house these travelers. They do not have an expensive start up cost, they are small enough to manage with minimal money, and don't require as much in maintenance or repairs. With new generations come new mindsets and these tiny homes fit perfectly into the young, non-committed ideal vision that is present in society.
With the population expected to double by 2050, the housing market is therefore going to have to expand as well because everyone needs a roof over their heads. The real estate market has taken huge strides and has had major success within the last few years, and rapidly became more lucrative to get into over the pandemic. With prices higher than ever before, and demand far exceeding supply at this moment in time, new technological advancement through the real estate market has been happening. With online transactions, new forms of property insight, and coordinated documentation filed for user specific investors available at all times at your finger types make the market run faster and more efficiently with complete transparency. These applications alongside new property types coming to fruition such as the tiny home concept are what make the already successful real estate market even more abundant.
Work Cited
“7 Emerging Trends and Tech for the Housing Market in 2021.” New Venture Escrow, 27 Aug. 2021, https://newventureescrow.com/7-emerging-trends-and-tech-for-the-housing-market-in-2021/.
“Real Estate Technology & Proptech Trends for 2022 That Changing the Industry.” Softermii, https://www.softermii.com/blog/technologies-in-real-estate-proptech-trends-the-changing-industry.
Chang, Brittany. “More than Half of Americans Said They Would Consider Living in a Tiny Home in a New Survey as the Lifestyle Increases in Popularity amid the Pandemic.” Business Insider, Business Insider, 12 Dec. 2020, https://www.businessinsider.com/survey-reveals-why-tiny-homes-have-become-so-popular-2020-12.
Hub, IISD's SDG Knowledge. “World Population to Reach 9.9 Billion by 2050: News: SDG Knowledge Hub: IISD.” SDG Knowledge Hub, https://sdg.iisd.org/news/world-population-to-reach-9-9-billion-by-2050/.
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