The pace at which technology is helping transform the real estate industry is a positive story after a period of turbulence in the housing market.
Last year, in particular, homeowners felt the financial strain, with average monthly mortgage payments reaching an all-time high of $2,306 in July. The knock-on effect was that few could afford to buy.
Are better times ahead? Mark Fleming, Chief Economist at First American Financial Corporation, perhaps summed the landscape up in his annual report:
“If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right."
In other words, despite challenging prices and interest rates, the real estate sector is stabilizing. And while it may not be booming just yet, the environment is ripe for digital innovation.
In this article, I'll delve into the game-changing property technology that looks set to support this steadying market, and the trends that are driving its adoption. This is a must-read for those involved in buying, selling, and property management.
Key drivers of digital acceleration in proptech
The rapid growth of proptech has been fueled by several key technologies.
Artificial intelligence: AI is revolutionizing how we understand the market, making it easier to crunch numbers, predict property values, and more. It’s even powering chatbots for smarter customer service.
Augmented reality and virtual reality: Way more than just clever gimmicks, AR and VR allow potential buyers to virtually tour properties from anywhere in the world.
Predictive analytics: Like having a crystal ball for the real estate industry, predictive analytics use data to forecast upcoming trends and buyer behavior, shaping smarter business strategies.
Personalization: Gone are the days of one-size-fits-all property listings. Tailored recommendations align perfectly with individual needs and preferences, improving the search experience for buyers and renters.
Key proptech trends
Let’s explore the key tech trends set to influence the real estate sector in the coming months.
1. Real estate predictive analytics engines
I mentioned earlier that predictive analytics are like having a crystal ball for the real estate sector, and tools like SmartZip really are revolutionizing the way professionals approach the market.
SmartZip works by analyzing heaps of data to predict which properties might be listed soon. It then helps create targeted marketing campaigns, automating follow-ups with potential clients through personalized messages — a bit like having a savvy marketing team working alongside you.
Tools like these are on the rise because they make it easier for agents to connect with the right clients – and stay ahead of the competition.
2. The democratization of real estate investing
Another proptech trend in 2024 is the democratization of real estate investing. Successful real estate investing is now way more straightforward. Thanks to AI assistants such as Alma, investors have more information at their fingertips, which helps drive profit margins.
Developed by DealMachine and powered by OpenAI, Alma provides valuable insights into properties you might be interested in, such as potential rental income or how much repairs might cost.
Alma also helps narrow down property searches with recommendations tailored to your investment strategy. It then streamlines the process of reaching out to property owners, making the process more efficient and informed.
3. Next-gen experience in the real estate sector
The real estate industry is undergoing a generational shift. With the majority of 'Baby Boomer' professionals set to retire by 2030, a new wave of Gen Xers, Millennials, and emerging Gen Z talent will take the reins.
Having grown up in a digital age, they bring a fresh perspective to the real estate sector. And, unlike many of their predecessors, these tech-savvy cohorts are poised to embrace proptech with open arms.
So, I think it’s safe to say that you can expect a surge in tech adoption and a wave of digital innovations that will redefine the way we approach the property market.
4. Tech-enabled brokerages (AI-powered, proprietary & in-house)
Once upon a time, brokers were the gatekeepers of important information about the real estate industry. Fast forward to today, and property technology has helped change the scene dramatically.
Tech has unlocked a treasure trove of data, putting comprehensive listings, market trends, and comparative pricing at the fingertips of buyers, sellers, and tenants. It's transformed how transactions are handled from start to finish.
Naturally, some brokers see this tech takeover as a threat. However, studies suggest that well-informed clients aren't turning away from agents. In fact, they're more likely to seek their expertise. Why? Because navigating a sea of data can be overwhelming, and that's where a knowledgeable agent shines.
Redfin, Compass, Side, and eXp Realty are the tech-enabled brokerages leading the way. They're improving client experiences, boosting agent productivity, and trimming down support costs. In my opinion, brokerages like these will stay front and center in the consumer's mind.
5. Digital personalization at scale
Homebuyers don't just want a match in terms of size, location, or price. So, I think it's good news that real estate professionals are now able to make smarter, more personalized recommendations to their clients, thanks to a new wave of property technology.
Let's imagine a young professional couple looking for their first home. They're tech-savvy, environmentally conscious, and keen on having space for a future family.
To help them find a perfect match, their realtor can now run a hyper-personalized property search to uncover a smart home in a suburban neighborhood known for its sustainability initiatives. This level of detail in the search process is likely to go way beyond what the homebuyer expects, setting a new standard in client satisfaction.
6. Sustainability and energy efficiency
As the world strives to meet net zero targets in 2024, sustainability is a major focus across all industries. In the real estate sector, proptech— particularly tools powered by artificial intelligence — will play a major role in reducing residential and commercial building emissions.
In smart meters, AI uses vast sets of data to control our energy use. In other tools, it can automatically adjust lighting or predict when equipment needs fixing. This not only saves energy but also cuts costs. Tech like motion sensors can also help, turning electrical items off when people leave rooms, for example.
But AI's role goes beyond individual buildings. Integrated within smart systems, it analyzes the availability of renewable energy like solar or wind power and adjusts building energy usage so it consumes more clean energy when it’s available. This reduces reliance on fossil fuels, especially during peak times.
7. Frictionless rental lifecycle
AI is shaking things up in the world of property management, too. It automates routine tasks like rent collection, lease renewals, and maintenance requests, saving time and reducing costs for property managers. It's improving the tenant experience by providing quick, accurate responses through AI-powered chatbots and addressing maintenance issues proactively.
By processing vast amounts of data like tenant profiles and market trends, AI helps building owners devise smart rental strategies and anticipate when tenants might be thinking about moving out. It's also making buildings safer with advanced security features like facial recognition.
In short, AI is another important proptech trend in 2024, as it revolutionizes property management and makes it more streamlined, safe, and efficient.
8. 3D home touring
In 2024, house hunters don't need to physically step through the front door of a property to have a look around. They can take a virtual tour, thanks to property technology powered by VR and AR.
I think iStaging is a great example. It allows realtors to create immersive, 360-degree virtual walkthroughs of a property with their smartphone. These can be shared easily with clients via email or social media to watch any time that’s convenient. They don’t even have to be in the same country!
9. The use of bots for underwriting
Underwriting's speed has a significant impact on the real estate market. Faster decisions not only benefit buyers by reducing waiting times but also smooth the selling process, improving overall customer satisfaction.
Traditionally, underwriting takes between three to six weeks. But with AI-powered platforms like Blooma, underwriters can process mortgage applications much quicker, accelerating property sales and benefiting all parties involved in the real estate transaction.
10. Smart real estate management
Earlier, I explained how AI-powered tech is making buildings more sustainable. It's also helping businesses make better use of space.
Real estate services provider JLL's occupancy management system, for example, helps assign workspaces based on data, like which areas are popular and when they're busy.
This dynamic property management and planning tool, powered by AI, ensures that their clients' offices match the needs of employees, boosting collaboration and creating more vibrant workspaces. Not only that; it also reduces energy and maintenance costs.
Embracing the future of property technology
The real estate industry has historically been slow to embrace technology. In fact, according to PwC's report on Emerging Trends in Real Estate 2024, many leaders in the sector remain unaware of its full potential.
However, this won't stop its rapid advancement. I believe that in 2024, cutting-edge tools, particularly those powered by AI, will continue to revolutionize the real estate sector, giving early adopters an advantage in a competitive market. The businesses that thrive? Those that take the technological leap. Without a doubt, we’ve got very exciting times ahead of us, and I cannot wait to see which of the trends that I covered will come to life.