How technology and consumer expectations are changing the real estate business

As featured in NJBIZ

Real estate in the U.S. is a $47 trillion industry, and everything about the industry is changing. How people buy, sell, and rent will be different for new generations of home seekers. At the same time, the future of work is changing the commercial leasing business as virtual companies and employees become increasingly productive and autonomous. At stake is how mobile our national, and New Jersey population, will be in the future. Imagine if someone could sell their house in 48 hours, move anytime, to anywhere, working remotely for anyone. This dynamic is evident today in smaller markets across the country and will roll into the expensive metropolitan areas in the coming decade.

For most consumers, buying or selling a residence is a prolonged and uncertain transaction. Will you be able to sell? For how much? And how do you trade one home for another? And when you do find a home to buy or sell, the paperwork and hidden expenses are painful. To make this process easier, there are 1.3 million real estate agents who will support people for a hefty 6 percent of the purchase price. This experience has been largely unchanged since the 1970s.

The three forces driving change are digital consumers, technology, and institutional venture capital and private equity investors.

Consumers want a 21st century real estate transaction that is as easy as purchasing stock, shoes, hotels, or taxi rides. They want on-demand digital services for everything, including their home. First-time home buyers make up nearly 50 percent of the market and workforce, and they are mostly millennials who grew up on their phone and trust doing transactions of all sizes with their thumbs.

New companies called “iBuyers” or “instant offers” will give you instant prices and cash for homes in a few markets like Phoenix, Las Vegas, Austin, and Los Angeles. Opendoor is the leader in this, with incumbents like Madison-based Realogy and Zillow Group creating their own instant offers divisions. Consumers can sell their home for cash in a few days to a company rather than another consumer. There is debate about when, or if, this model will work for home prices over $600,000 and in metro areas like New Jersey, but indications are that iBuying will go from 1percent to 30 percent of the market faster than anyone expects. People would be able to move anytime they want, with big banks and technology start-ups facilitating the process.

Technology makes it intuitive for consumers to find the house they want, get it financed, and even help them fill the house with furniture after move-in with a few swipes. The industrial real estate sector is buzzing with a record $9 billion of investment into what are called “PropTech” startups that automate how buildings are bought, managed, leased and used. In residential, Zillow changed the rules in the 2000s by making every MLS listing available in their app. The next generation of home seeker will have a seamless end-to-end search, find, sign and move-in experience all on their phone, with AI that anticipates their needs and satisfies them.

Funding this disruption are the biggest financial backers in the world from SoftBank, Goldman Sachs, Andreessen Horowitz and JPMorgan. They are pouring billions into companies that promise to make moving and working easy and certain.

Our Newark-based company is helping to power the digital advertising for the leading brokerage, builders, PropTech and commercial managers. We have learned that advertising property is unlike any other marketing category because people do it infrequently and spend huge sums of money when they do. Homes and offices still rely on yard signs and brochures to spread information about what’s available, but that is not how consumers get information anymore. The future of real estate marketing is using data to predict when people want to move and serve them relevant ads anywhere they consume content.

What does this mean for New Jersey residents and businesses?

Our conclusion is that urbanization will continue to attract people to the New York area to live and work. As in California, if there remains a critical shortage of affordable housing in New York, coupled with the ease of finding, financing, and securing a place to live, New Jersey will benefit. On the downside, if moving out of New Jersey and away from high taxes and ailing infrastructure toward more affordable cities that rely on remote workers to power their economies, New Jersey will need to find ways to keep people living here instead of Austin, Charlotte or Denver.

After traveling to all of the major cities for our advertising executive careers, we think Newark has all of the ingredients for startup success, and are choosing to build here for the long term, near Manhattan while being able to live in the beautiful New Jersey towns not far away.

CONTACT US to learn more about Audience Town and how we can help you reach your desired real estate audience!