Some industries are quick to adopt emergent technology to gain an edge over competitors. Media, medicine, and engineering all happily push the frontiers of the known to deliver the best product to their customers. Other industries are slower to change, preferring traditional methods of catering to the needs of their clients.
Residential real estate is one such industry that has been, so far, slower to change. Traditional realtors are still an integral part of the homebuying process, despite the fact that 90% of homebuyers use the internet in some way to research before making a purchase, according to a study by the National Association of Realtors. And over half of those internet searches are done on a mobile device.
In addition to the ubiquity of internet searches in the search for a home, the median age of the homebuyer has dropped dramatically since 2012. Generation Y (Americans born between 1977 – 1994) have overtaken Baby Boomers as the largest demographic seeking houses on the market, according to realtor.org.
All this adds to a certain expectation by the modern homebuyer. Millennials in the marketplace expect trustworthy real estate agents and the ability to access photos or walkthroughs of homes on their own terms and schedule. They also desire more and more robust information to assist in the homebuying process. Simple crime maps and income statistics are not enough to satisfy most homebuyers, though they are a helpful place to start. While real estate agents are not going away anytime soon, the ones who provide expansive data to their clients and open communication channels will increasingly be the most successful. Here are a few resources that modern real estate hunters are demanding, and where to find them:
Data Democratization and Capitalization
The traditional idea of real estate agents being the gatekeepers of market information has gone away. Zillow, Trulia, Realtor.com, and Redfin all encourage consumer interaction and data accuracy to maintain their relevance in the home search. Real estate agents now are most relied on for their expertise in tax code, their familiarity with neighborhoods, and their expertise at getting homebuyers to ask the right questions when searching for a home to find the best fit.
Information about the changing climate is another data point that has already begun affecting home prices. Home and flood insurance values are changing quickly, and buyers are demanding more information about flood zones and wash-away risk for coastal or river-adjacent homes. FEMA provides a Flood Map Service Center to determine risk for flooding for any home in the nation.
Using crime data to determine neighborhood livability is another valuable step in finding the right place to hang one’s hat. Again, sourcing information from multiple sources is crucial. One data point cannot tell a potential buyer everything they need to know. NeighborhoodScout, CrimeReports, and SpotCrime are all useful tools to find out what type and what amount of illegal activity occurs in each neighborhood, for varying costs. In addition, the website AreaVibes boils crime data as well as housing costs, quality of education, and general cost of living into a “livability score” to better inform potential buyers in each community.
This expansion of the data available to buyers is integral to understanding the new market. Searching for a home without using all the resources available is, at best, being reckless with one’s hard-earned capital.
The Next Wave
Data, both Big and small, is crucial for the home buying process, but there are other emerging technologies that could affect the market significantly. Aerial photography, augmented and virtual reality, and using psychographic data to predict what a homebuyer is looking for before they even know themselves.
Aerial photography is already gaining ground in the property market. Drones are a relatively inexpensive way to capture photo and video of a property, as well as the surrounding area. In Houston, where Hurricane Harvey recently caused severe flooding, drones were dispatched to assess the damage and assist insurance companies find out the extent of the damage. This is especially useful for property larger than a few acres. As smaller drones become easier to pilot, expect to see flythroughs of rooms, hallways, and living areas being posted on relevant websites as well.
Augmented reality is a phrase that intimidates many, but it simply means superimposing digital information on a live image of physical world. This technique is easy to apply to geolocation data of homes, allowing users to quickly determine details of a house directly in front of them and which houses on a block are on the market without the need for a traditional “For Sale” sign.
San Francisco-based home sales startup Opendoor already implements an element of this, allowing buyers to securely let themselves into houses on the market. The reputation of the user is tracked, removing liability from the homeowner.
Finally, using the increasingly common medium of virtual reality headsets to tour houses is inevitable, and could streamline the house hunting process significantly. Buyers will soon be able to explore a series of homes from a real estate agent’s office or their own living room in minutes in what once took days. For those buyers that are relocating to another region, this could be an invaluable time- and money-saving resource.
All of this is indicative that the real estate market is changing quickly. The industry is in flux, which means the agents who refuse to adapt to the new paradigm will be further specialized or weeded out. Currently, 49% of all agents’ leads come from referrals by previous customers, implying that personal attention is still very much a valued asset. Regardless, if agents continue to put the needs of their clients first and provide a valuable service in navigating the property marketplace, buyers will continue to employ their services.
A changing industry is positive for homebuyers, as more tools and information can only expand their ability in the marketplace. Homebuyers that are able to adapt to a changing information landscape can expect to be armed with what they need to make the correct financial choices for themselves and their families, no matter what route they take to arrive there.