If you pictured the real estate industry as a house (which is fitting), you might say it looked like a heritage home – solidly built, but stuffy and outdated in its design. That’s all starting to change, however, as new trends emerge to tear down the foundations and rebuild from the ground up.
In this article, let’s explore three pivotal trends disrupting the real estate industry: technology, demographics, and the nature of urban work. These are broad macro trends; for each, we try to hone in on singular transformations and disruptions to offer a compelling cross-section of current industry dynamics.
Welcome to your new home: the future of real estate.
“Anytime you bring innovative technology to the table that can make the process easier, it will be viewed as disruptive,” according to Regan McGee, the owner, and CEO of Nobul.
Speaking to Superb Crew about seismic transformations in the real estate industry, he shared that “Incidentally, technological advancements are beginning to gain real traction in a stalwart industry that was initially skeptical.”
McGee’s company is part of a broad push to move real estate into the 21st Century (and beyond). Thus, the open digital marketplace has radically transformed the realtor-consumer dynamic. Furthermore, the company has embraced functionalities like Blockchain, AI, etc., to round out its end-to-end offering.
Elsewhere, other technological advancements are causing significant waves. Big data and deep learning are rocking the development and investment sectors of the industry, as developers and investors can now access impactful scores of data to guide their decision-making. Furthermore, immersive technologies and aerial drone technologies are completely reshaping how agents market homes to on-site and remote buyers. And blockchain technology introduces fractional ownership to a new generation of investors keen to enter the marketplace at a low price point.
In short, technology is the most significant driver of disruption in the industry currently (no surprises there).
According to the National Association of Realtors (NAR), last year marked the first-time millennials overtook older generations as the largest share of real estate buyers. It was bound to happen eventually. Still, it caught some dyed-in-the-wool practitioners off-guard.
Millennials differ from previous generations in a few critical ways. They are “digital natives,” raised with the internet and reliant on digital tools to execute processes like transactions. They are flexible in how they purchase – comfortable with sight-unseen sales and willing to explore alternative financing options. And they prefer convenient communication modes like direct messages, texts and social media. Each of these preferences exerts a marked influence on the industry.
As millennials continue to ascend in purchasing power, expect to see the industry mold itself around these preferences. The days of in-person meetings down at the realtor’s office might be a thing of the past.
Finally, there can be no summary of real estate disruption without nodding toward the recent global pandemic. The COVID-19 outbreak sent tidal waves through the industry. And while some traditional practitioners waited for a return to “normal,” they found themselves waiting for a long time.
In particular, the pandemic catalyzed a great migration out of brick-and-mortar workplaces. This trend had immediate, lasting knock-on effects for both the residential and commercial real estate markets. Many buyers treat their new homes as remote offices. Thus, tastes and demands changed, and purchases shot up (at least for a period). Contrarily, commercial real estate developers/practitioners had to pivot towards hybrid, mixed-use spaces. This was crucial to account for waning demand.
There were some rumblings at the beginning of the pandemic about “urban flight,” with some experts predicting city exoduses. Those forecasts were never fully realized. In fact, according to UN studies, North American urbanization sits at an impressive 82% of the total population. Experts expect that figures to rise appreciably in the next two decades. Naturally, this trend will transform and disrupt all facets of the real estate industry. From job market competition in urban areas to sustainable development.
These are the macro trends disrupting real estate. Inside each, you will find micro-disruptions chiseling and buffing various aspects of the industry.
