Technology has affected housing prices in numerous ways, from virtual viewings to AI chatbots to real estate crowdfunding. While we are not exactly in the Brave New World of real estate that some predicted, it does not show any signs of slowing down. Here is what you need to know about technology and real estate.
How has technology improved housing?
Technology has changed the real estate game in numerous ways, even in the past few years, by improving the way properties are listed and helping potential homebuyers view those houses, and everything in between. Here are a few ways technology has improved housing:
Virtual and augmented reality. With this type of technology, potential homebuyers can view houses without leaving their own couch. VR and AR technology even allows buyers to view what different pieces of furniture, wallpaper, carpeting, and pretty much any other home renovation fixtures will look like in their new home—without making any actual changes. It is also a good piece of technology to use if you buy a fixer-upper and want to visual different alterations.
Property technology. Otherwise known as PropTech, this innovative digital technology improves home buying and selling, as well as aiding in the management and research of real estate properties. Since 2021, PropTech has been utilized by real estate agents, home sellers and homebuyers alike, disrupting the way real estate deals have been conducted for decades.
Artificially intelligent chatbots. AI chatbots have been helping real estate agents who are otherwise busy selling and showing homes. Thanks to AI, these chatbots are able to answer questions from potential homebuyers, respond to emails, and follow up on potential leads in real time.
Predictive analysis. This type of technology finds properties for homebuyers that fit their individual needs and helps real estate agents find clients. Predictive analysis came to the fore in 2021 and has taken hold of the real estate market in a major way.
Blockchain and cryptocurrency. Blockchain allows for safe cryptocurrency transfers without requiring a traditional bank for financial institution. The verification is done instead by a large web of computers. This type of technology can even facilitate safe, secure, and transparent contract signing.
Real estate crowdfunding. This allows potential homebuyers to raise money from multiple investors. In real estate, these platforms are similar to more traditional crowdfunding but are amplified. This type of crowdfunding places the buying power in the hands of numerous people whereas purchasing real estate used to be a more singular experience.
Drones and advanced cameras. If you have ever shopped online for a house or even gone on an apartment search, you know how important good photography is. The implementation of advanced cameras—and therefore vastly improved photography—as well as drones has greatly improved the chances of success for buyers and sellers alike. Drones even let you view the entirety of the exterior of a property, providing a much more accurate picture than ever before.
Technology and housing prices: how they relate to each other
Technology can impact housing prices because potential homebuyers these days have much more information available to them about the market as well as individual properties. This gives buyers the ability to make buying decisions much more quickly, making it far easier to make an offer on a home. Compared to the real estate booms of the 1980s and 2000s, the mechanics of homebuying are faster. The speed exaggerates the increases in demand that come from the lower rates.
The speed is similar, in fact, to actually having an increase in buyers, since it becomes more likely that a property will receive numerous offers when it first comes onto the market. When it is so easy to make offers, buyers make more of them on more homes before they become discouraged and stop bidding. Some economists even suggest that technology has lowered the transaction costs of purchasing a property, with faster offers leading to an increase in prices and those higher prices, in turn, contributing to a feedback loop of even higher price appreciation.
Can technology solve the housing crisis?
Because one of the issues driving the housing crisis is too little supply and too much demand, technology can generate more—and cheaper—units. A few major innovations in homebuilding have been in 3D printing and modular housing construction. Companies such as Blokable, for instance, build portions of a home in a factor and ship the parts to each site for assembly. This is one example of technology cutting costs and construction times by functioning within a more controlled environment, allowing for a high rate of productivity despite the weather and shortages in physical labour used for more traditional building.
Technology can also expand access to capital. Companies such as NerdWallet and EasyKnock are helping to make shopping for the best mortgage easier. These companies take on and automate the majority of the borrower’s work like filling out applications and delivering great options to fit a borrower’s circumstances. Another company, Divvy, helps renters on their path toward homeownership by converting rental payments into down payments.
As a way to improve risk predictions methods, blockchain entrepreneurs are currently building networks of payment information to help predict a borrower’s future willingness and ability to repay. The reason for this innovation is that blockchain technology and artificial intelligence are helping to better predict risk by creating more accurate models and delivering more and more data.
