Real Estate Technology Trends: First Half of 2021
2021 has been another year of unprecedented change. Some things are consistent, like some of the 2020 real estate trends that have continued throughout this year, and new trends have emerged as well. The past several months have seen the real estate industry shift into a series of pandemic-induced ups and downs, as opposed to the rush to adjust in 2020. Specifically, we’ve seen the real estate industry continue to embrace and incorporate more technology in order to survive and thrive. Below we break down some of the most noteworthy real estate trends from the first half of 2021 and take a look at where the real estate industry is headed in the near future.
The Top 10 Real Estate Trends in 2021 (So Far!)
- The increasing value of the real estate industry
- The flurry of real estate investment activity and PropTech entrants
- Real estate technology becomes smarter
- Virtual-first: companies embrace permanently hybrid models
- Millennials are now the leading buyers group
- Hyperlocal is the only local
- Social media as a discovery and a validation platform
- Changing communication preferences
- Increased employee flexibility and support
- The rise in data breaches and cyber security
The increasing value of the real estate industry
According to the Business Research Company, the value of the real estate industry will surpass $7 trillion by 2022. With the market as a whole looking like it won’t slow down just yet due to continuing low mortgage rates, workforce changes, and a still competitive seller’s market in many places, the real estate industry is expected to continue on its high growth path. Plus, with virtual capabilities and more options available for both buyers and sellers, the seasonal markets that we’ve come to expect each year have changed. Now more than ever, people can view homes at their own convenience and because of that and continued low inventory, buyers have and are likely to continue to search for homes at a steadier rate throughout the year.
The flurry of real estate investment activity and PropTech entrants
Because of the need for technology to support every aspect of real estate operations, from virtual tours and property management to remote work and communications, there’s been an uptick in investment in the real estate industry by PropTech companies. Specifically, the growth in SPACs or “blank check companies” underscores the huge potential of real estate technology and companies providing real estate services. Since most real estate companies have continued to incorporate and invest in technology throughout this year, we expect this trend to continue. More and more companies will go public through SPACs or traditional IPOs, and the flurry of real estate technology mergers and acquisitions will continue as well.
Real estate technology becomes smarter
Along the same lines, we’ve also seen a rise in PropTech companies who are looking to invest more in technology to stay ahead. The startups that use AI and Big Data are likely to receive more funding because they’re already pushing the boundaries of how to use technology to innovate traditional real estate processes. Opendoor is a great example of this. As Co-Founder and CTO Ian Wong said when describing how Opendoor works, “Opendoor is able to provide near-instant fair market values for homes using a proprietary valuation model that leverages first and third-party data, along with the use of machine learning.” Opendoor uses advanced decisioning to process more data points, and faster, than a person ever could, providing potential sellers and Opendoor with a quick, accurate estimate of what their home is worth.
Startups focused on or leveraging AI, machine learning, and newer technology like quantum computing will be the companies who automate different segments of the real estate industry, eventually influencing other companies and their operations to join the transformation. The FinTech space has been investing in these technologies for years and it looks like real estate is catching up.
With more funding being poured into companies who are willing to take a risk with new technology, it will likely be increasingly challenging for smaller companies to compete, though several have been able to change how they operate and find their specific niche in order to succeed.
Virtual-first: companies embrace permanently hybrid models
Virtual technology like virtual tours have continued to be in high demand even as many COVID restrictions on gatherings have been lifted, and we expect this to continue. Buyers who can walk through houses virtually aren’t going to give up the convenience in every situation. Busy professionals, people relocating, international buyers…there are many scenarios in which and people for whom virtual technology is going to continue to be key.
That being said, real estate agents need to be prepared to provide sellers and buyers with multiple options for how to access properties and other services. Agents should create a plan to work with vendors (or other divisions within their brokerage) that provide virtual services as well as in-person services. These services should include appraisals, digital transaction management, financing, and more. Because of the convenience that these automated and digital services have provided throughout the pandemic, and many real estate companies have already seen the benefits of adopting these workflows, it’s likely that this trend of utilizing virtual capabilities will be a more permanent part of the real estate process in the future.
Millennials are now the leading buyers group
In 2022, Millennials are expected to account for about 55% of the real estate market. Because Millennials as a whole waited longer to buy their first home, Millennials are changing the definition of what a first-time home buyer looks like. Developing a strategy to reach and engage Millennial home buyers will continue to be important throughout 2021 and in the years to come. Some qualities Millennials look for in homes have changed due to the pandemic, and others, like walkability, nature, and a high quality of life, are still important. COVID-era priorities are also likely to stay, such as having a home office, home gym, and enough room for hobbies and guests to spend lengthy amounts of time in.
Hyperlocal is the only local
Though digital tools for real estate are as important as ever, sellers and buyers continue to value high quality local content that demonstrates a deep understanding of the area in which they currently, or want to, live. The increase in demand for hyperlocal content means that potential buyers want to understand what the local schools, childcare options, taxes, laws, politics, quality of life, attractions, and more are like. Sellers want someone who is deeply connected to what’s going on in their neighborhood and even on their street. This trend can put smaller real estate companies at an advantage and set them up to continue to succeed in the future, as long as they have the capability and desire to create and share meaningful, hyperlocal content online. Larger companies like Compass usually favor the listing marketing approach, so hyperlocal content marketing is a great way to stand out and compete.
Social media as a discovery and a validation platform
In 2021, 97% of all buyers used the Internet as their first step in the home buying process. Similarly, sellers leverage online tools like home valuation estimates as much as ever. Simply because of their reach, the big social media platforms have offered benefits to savvy real estate companies for years, especially those who know how to focus their marketing to avoid wasted spend. Now, with our online use as high as it is, with Millennials being the largest generation in the real estate market today, and with the changing expectations consumers have, buyers and sellers are turning toward social media for both discovery and validation. They’re using it to find places to move, agents they want to work with, and seek others’ feedback on their decisions. Social media isn’t solely for aimless scrolling; it’s also the best medium for attracting real estate leads. People value the opinion of their network, look for honest reviews, and are influenced by “social proof” that the company they’re interested in is trustworthy. Having a strong social media strategy for real estate is more important than ever, including and beyond Facebook, which is still one of the most widely-used platforms and has seen incredible growth so far in 2021.
Changing communication preferences
Since 2020, texting has been the most popular form of communication between real estate agents and their clients – and it has grown even more popular in 2021. Email and phone are close behind in terms of overall preference, according to the National Association of REALTORS®. For buyers and sellers, especially higher net worth buyers and sellers, being accessible by any communication method is hugely important, though they are more likely to call directly. Either way, online conversions via web forms are exceedingly being replaced by direct contact methods, especially for higher-intent real estate prospects who’ve already done their research and know what they want, as well as sellers looking for guidance.
These changes in consumer preference drive workflows and force brokerages to adapt. Many real estate brokerages have already built or are considering building e-leads teams that are responsible for engaging and qualifying people who inquire about real estate services online, including through the website, as well as online ads. Because so many people start their real estate search process online, online leads can be less far along in their decision process. Creating an e-leads team or working with a partner company to improve the quality of online leads (or both!) can be a game changer in freeing up agents’ time to focus on those who are closer to being ready to list their property, proceed with buying, or are their best source of repeat or referral business.
Increased employee flexibility and support
According to a recent survey, 65% of workers want to become full-time remote employees post-pandemic and 31% would prefer a hybrid work system. Many people say that they’ve established a work-life balance that they enjoy, allowing for higher productivity and time to take care of their home life.
With these workforce changes also comes the trend of mental well-being as a priority, something that wasn’t discussed as much before the pandemic. Employees are taking more care of themselves, or at least trying to, which as a result, allows them to be able to come to work refreshed and energized to care for their clients without sacrificing their well-being. The charge for companies is how to embrace and support this shift. Moving from praising an overworking culture to encouraging a more intentional and often more productive culture is one of the biggest changes and one that is likely to last at least in some companies and sectors.
The rise in data breaches and cyber security
With more people working remotely, there’s been a significant increase in cyber attacks. Major attacks earlier in the summer dominated headlines, like those JBS, Fujifilm Corporation, Cox Media Group, and Colonial Pipeline experienced. These breaches hugely affected the companies and economy as a whole. Specifically within the real estate industry, KPMG noted in 2018 that the probability a company would experience a material data breach in the next two years was 26%. And that was before the latest rise. Targeted attacks aren’t the only ways data can be lost, as system glitches and human error are also contributing factors. All should be taken seriously.
Because more people are online in 2021 than ever before, cyber threats are likely only going to grow. People continue to go online from less secure public and home networks, and with travel resuming again, businesses should consider what additional cyber security measures hybrid and remote workforces need and that they may be lacking. Other policies like having regular training sessions in place for employees and staying up to date with the best security practices are key and will continue to remain at the forefront of the trends affecting the real estate industry.
Interested in learning more about these real estate trends or how to leverage real estate technology to help your business grow? Connect with us today to discuss your needs.