Real Estate Innovation in 2015
Volatility in world financial markets continues to drive uncertainty. CNBC real estate reporter Diana Olick explains that mortgage application volume is up a significant 22 percent over 2014, with increases in both refinance and purchase applications. Purchases of new homes, however, are leading the charge. On the commercial side, TechCrunch contributor Josh Guttman reports that money is flowing back into commercial development as the United States economy improves. But how are these forces driving innovation in real estate in 2015?
Tech to Bolster Commercial Real Estate
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“The first technology innovators to focus on real estate primarily addressed the residential market,” Guttman says. “Companies like Zillow, Trulia, Realtor.com, RedFin, and StreetEasy showcased the power that technology can have when applied to a market as large and lucrative as residential real estate.”
Guttman further explains that, with a few exceptions, commercial real estate has been largely bereft of technological innovation. However, that situation may be changing. As tech-centric companies turn their focus toward commercial real estate, Guttman predicts that innovations will arise in opportunity-rich areas such as property management, analytics, lending, and mobile technology.
Welcoming Automation Home to Real Estate
You may have heard the term automation and wondered if and how automation applies to real estate. In a BiggerPockets.com article, entrepreneur Martin Orefice suggests that automation is the key to increased efficiency and maximized profits. Automation, he says, allows investors to spend less time on tasks like marketing, bookkeeping, prescreening, and managing contractors and staff, and more time on activities driving profits.
Creative graduates of sustainability and real estate management master’s degree programs may also be able to help business owners integrate smart building technologies into new and existing properties. This integration is a major trend in commercial markets, according to Deloitte’s 2015 Commercial Real Estate Outlook report.
Getting Creative With Rental Markets
Trulia’s Ralph McLaughlin studied residential rental prices in popular areas such as Portland, San Francisco, and Miami. Recent graduates, he observes, may have little hope of being able to afford a place on their own, even if they have a good job. A recent report by the San Francisco Board of Supervisors found that room share services like Airbnb are putting more pressure on already tight rental markets by enticing property owners to convert inventory once available for long-term rental purposes into short-term vacation rentals.
New York Times journalist Michelle Higgins reports that older renters, even married couples, are finding themselves in similar circumstances. According to Higgins, some may choose to live with roommates in order to afford a comfortable home in a desirable neighborhood.
Developers who recognize this trend may be able to capitalize on renters’ increasing flexibility. These developers may offer listings that appeal to college-educated urban dwellers willing to give up space and privacy for location and convenience.
Tech Gives For Sale By Owner Market a Boost
According to Crain’s Cleveland Business real estate reporter Stan Bullard, sites like Zillow.com and ForSaleByOwner.com (FSBO) are leading many to forego the help of a real estate agent and sell their own homes instead. “For the first three months of 2015, seller traffic to ForSaleByOwner.com was up more than 200 percent over the comparable period in 2014, according to the Chicago-based website owned by Tribune Publishing Co,” Bullard observes. In the past, FSBO sellers had trouble pricing their homes correctly, but the Web eases the ability to pull comps and other information that was once available only to professionals.
Is MLS Due for an Overhaul?
Looking toward the second half of 2015, industry observers and consultants like Bob Bemis are excited about the potential to bring change to dominant but long-static MLS (Multiple Listing Service) technology. According to Bemis, expanding the capabilities and functionality of MLS could benefit vendors, agents, brokers, association owners, and MLS staff itself.
These innovations may likely affect every part of the real estate sector, from residential to commercial, and brokers to buyers. Where do you think real estate innovation will take the industry in the next six to 12 months?