May 14, 2019
Today, the U.S. housing market is nearing all-time highs following a long recovery from the 2007-08 global financial crash, which was fueled (in part) by the collapse of the housing market itself. Despite this, the traditional Real Estate market is challenged by a number of contemporary trends. Already enduring digital disruption via websites like Zillow and StreetEasy, the residential real estate sector must adapt, adopting emerging technologies to disrupt itself from within.
CURRENT TRENDS & PAIN POINTS IN RESIDENTIAL REAL ESTATE
In addition to limited space and gentrification – major trends jacking up costs in urban neighborhoods – there is an unprecedented demand for ‘single-dweller’ housing in cities due to more and more young professionals choosing to postpone family life for professional and social pursuits. Startups like WeLive (WeWork) and Dwell offer innovative real estate models that address the anxieties of urban living and new socioeconomic realities. A young professional who would have scrambled to find a roommate on Craigslist (an early real estate disruptor) now seeks affordable, flexible co-living solutions like Ollie’s co-living microsuites and micro-living building in NYC that have a built-in social network and great amenities. The future of cities will be small, smart living spaces.
Whereas baby boomers and Gen Xers desired to settle down, millennials – impacted by high student debt and the high cost of urban living – are largely single dwellers, less inclined to marry and start families. And while older generations saw homeownership as a source of wealth, their younger counterparts are less likely or able to buy housing. Meanwhile in the suburbs outside major cities, there is a glut of McMansions built in the lead up to the 2007 housing bust but a shortage of modest ‘starter homes’ for young families. Millennials currently represent the largest market to buy and rent homes, with Gen Z soon to follow. As real estate customers, these younger generations expect on-demand information, flexibility, market and price transparency, and ease of transactions. They also value green living and perceive properties with high quality visual presentation as higher value. These digital natives are also increasingly willing to make significant purchasing and renting decisions online.
In the past, high fees for traditional agent/broker services could be justified because consumers depended upon qualified real estate professionals for access to residential listings. Now, the digitally engaged consumer has a wide range of resources for market information, including websites like Zillow, Realtor.com and Trulia and other platforms that have made market analysis available to the public. The average buyer or renter today can perform sophisticated searches and compare listings – a service that was once the exclusive domain of realtors – all for free on his or her own time. Though agents no longer have an informational advantage, their role is not obsolete–their specialized assistance is desirable for negotiating and dealing with inspections, escrow, insurance, co-op boards, etc. With digital competitors firmly entrenched, traditional realtors need to focus on differentiating their services, capitalizing on the fact that although people are digital-first real estate transactions will always be emotionally-driven, human decisions.
CURRENT STATE OF TECHNOLOGY IN REAL ESTATE
Residential real estate has gone through several waves of digital disruption, including the rise of online portals that have come to dominate the real estate search. Online platforms have also helped streamline many purchasing, rental and leasing processes, with some companies now offering fully integrated, end-to-end solutions for buying and selling homes and even generating mortgages. Evidence of the rise of ‘Proptech’ or ‘REtech’ can be seen in newly created CIO positions at real estate firms, while the technological readiness of homes is becoming a key selling point for consumers desiring smart and connected, energy-saving home solutions.
Despite the rise of the Internet and the importance of a home’s digital listing, staging a property – making it attractive to visiting buyers to boost its perceived valuation – remains key to a listing agent’s success in marketing and selling a home. This may include purchasing furniture for an empty space, repainting and refinishing, and/or rearranging items in an existing space, which takes time and money. Though good, old-fashioned yard signs remain a hallmark marketing tool for listing agents, emerging technologies are steadily creeping into residential realty. Common real estate marketing practices like distributing expensive paper brochures, staging properties, and even the construction of model homes will have to be reconsidered as new technologies emerge, offering potentially cheaper and more effective alternatives.
POTENTIAL FOR AR/VR IN RESIDENTIAL REAL ESTATE
Real estate professionals are finding creative ways to incorporate advancing technologies. The ability to remotely interact with clients, for example, is reducing the need for physical office space and travel, which in turn reduces overhead while permitting wider outreach. Over the last decade, ExP Real Estate has grown into a billion dollar real estate brokerage in North America, all without housing their agents in offices. Instead, they’ve built a sprawling organization that meets for training and strategic planning only in the virtual world. ExP may be an outlier in using tech to eliminate the costs of office space, but it points to the powerful potential for emerging technologies to disrupt the real estate sector.
Robust digital strategies, including the effective application of augmented and virtual reality, will be key to realtors’ success in reaching clients with independent access to market intelligence. A real estate transaction is still a high-stress event; the financial stakes are high for both buyer and seller, but immersive technologies can help facilitate efficient communication among all parties and alleviate what is typically an emotionally-charged process. For smaller real estate organizations and independent brokers, understanding the potential of AR/VR will be just as critical as for larger firms if they are to keep pace with technology and compete.
APPLICATIONS FOR AR/VR IN REAL ESTATE
Today, the Internet is a person’s first stop in the search for housing, but it’s hard to make a listing stand out among hundreds or thousands of similar listings online. Listings with VR tours, however, can effectively showcase a property and help hasten a sale or rental without the need to go to dozens of open houses in the company of a realtor. The immersiveness of VR means users can freely explore a realistic rendering of a property from the comfort of home and make an informed offer. Homeowners anxious to close quickly and fetch the best price can have greater confidence in a listing agent who uses high-quality, interactive VR models to market their property.
Camera companies like Matterport and GeoCV make high-quality virtual mapping fast and accessible, producing virtual scale models of properties that can be toured wearing a VR headset or examined from an overhead ‘dollhouse’ view. Lower-quality VR models you can walk through can even be created from photos taken on a smartphone. Of course, for consumers who don’t own a VR headset, VR tours can be enabled for mobile or desktop and real estate agents are also equipping their offices with VR devices. For out-of-state or just very busy homebuyers unable to visit a property due to time or distance, VR allows them to visit and revisit a home from wherever, providing answers to the questions normally fielded by an agent on site. In this way, VR can accelerate real estate transactions.
An agent’s commission is a predetermined percentage that doesn’t account for the time it takes to close a scale, which means technological solutions that reduce routine informational queries and travel are worth exploring. In some cases, the agent hosting a property is there only to unlock the door and entertain browsing visitors who may not be serious buyers. Augmented and virtual reality are excellent technological stand-ins for a human agent seeking to maximize productivity.
Innovative rental companies like Tour24 take advantage of facial recognition technology to grant – via mobile app – prospective renters access to apartments without an agent or tenant present. A beacon-activated informational tour unfolds via smartphone as the potential renter moves through the property. Taken a step further, open houses might come with AR smart glasses used to scan QR codes and view heads-up commentary at various points of interest. In this way, an agent could accommodate a prospective client’s schedule, giving them secure access to the home, and customize the tour without having to personally attend. Even classic marketing practices like planting a realtor’s sign can be taken to the next level with AR: Compass Real Estate, for example, has rolled out beacon-enabled signs that flash at passersby. Similar AR-enabled signs scanned via smartphone could provide property information and statistics accompanied by a prompt to contact the agent.
Virtual Model Homes and Virtual Staging
It’s challenging to describe and sell a property that hasn’t yet been built. In most cases, a homebuyer or renter is in the market to purchase a vision for a property, so how that vision is presented is key. AR/VR technologies are powerful tools for bringing a future property to life, enabling tours of properties still under construction and making it possible for potential buyers to visualize spaces that do not yet exist. When marketing a home in progress, the immersiveness and detailed accuracy of a virtual reality model can supplement or entirely replace the usual promotional pamphlets and 2D or physical scale models. Brochures might be AR-enabled, while mixed reality could enable effective on-site tours, helping visitors see the potential of an unfinished, undecorated property and come to a decision before seeing the finished product.
When looking for a home, you have to imagine what it would be like to live in an unfamiliar space. While a good agent is able to anticipate what the client is looking for in a property, much of the decision making process comes down to the initial impression of an open house. Realtors often hire staging companies to bring in furniture and decorate homes before going to market. These companies generally stick to neutral decor, aiming to appeal to the greatest number of interested buyers. A couple with four children, however, seeks very different features in a home than a young bachelor or older couple with grown children. But what if you could provide a personally compelling visual narrative of the same space to individuals with varying tastes and requirements? Of course, you cannot physically rearrange a staged home for every potential buyer but with AR/VR you can help onlookers transcend a property’s current physical state, which might push them to make an offer. Staging can become a personal experience offering an array of design configurations depending on the client.
Imaging solutions from virtual staging startups like RoOomy, which counts Sotheby’s among its clients, overlay furnishings and interior designs into virtual models of empty properties captured via Matterport’s technology. An imaginative agent could put in a virtual jungle-gym or swimming pool, a pool table, built-in bar, home office, etc., customizing the virtual presentation down to the most minute details to be most effective. There are multiple benefits to virtual staging, including money, time and resources saved on temporary furnishings and meetings at the property itself, the ability to stage multiple interior design schemes and the opportunity to cross-market the services of partner businesses like interior designers and furniture manufacturers who might share the development costs of the virtual staging.
Digital platforms have produced an expectation of ease and access that has disrupted most corners of the real estate industry. A trend towards vertical integration of these platforms threatens to further encroach on the markets of traditional realtors. Real estate professionals must evaluate how emerging technologies like AR/VR can help them compete and create an irreplaceable role for themselves.
The Enterprise Wearable Technology Summit (EWTS) is an annual conference dedicated to the use of wearable technology for business and industrial applications. As the leading event for enterprise wearables, EWTS is where enterprises go to innovate with the latest in wearable tech, including heads-up displays, AR/VR/MR, body- and wrist-worn devices, and even exoskeletons. The 6th annual EWTS will be held September 17-19, 2019 in Dallas, TX. More details, including agenda and early confirmed speakers, to come on the conference website.