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Why is now the right time to invest in residential real estate technology?

Updated: Sep 28



Triggered by panic for social distance, home offices, and more closets for toilet paper, no sector of the real estate industry has benefitted more from the pandemic than single-family housing. “COVID-19 has rapidly accelerated the innovation and adoption of intelligent building and smart home technologies that were already taking hold in the real estate industry,” says Fifth Wall’s Brendon Wallace. “But now thanks to the pandemic most real estate owners feel as if they’ve been thrust five years into the future.

As a result, they now recognize that technology adoption isn’t just a ‘nice-to-have’. It’s a necessity. And in the longer-term if real estate owners don’t figure out a strategy to invest in and get access to the technologies that can be strategic to their businesses in a post-COVID world they will soon be, with certainty, on the wrong side of history.” Some of these innovations are obvious problem solvers that will become operational standards, like remote entry, voice activated elevators, and digital payments for rent, room service, and valet parking. Smart home/ community technology will see continued adoption as we move into a post pandemic world.

Importantly, a second factor affecting the single family real estate market, is soaring home prices. As articulated in a recent Forbes article, according to indices like Realtor.com, Zillow.com, and Redfin. com, only a half dozen U.S. housing markets have growing supply and decreasing prices. Hundreds of others are up 30% - 50% year over year shattering price records across the country. This is caused by a multitude of colliding factors. Thanks to the pandemic, a rough year with Mother Nature, the realities of demography, and the physics of housing construction which can’t grow homes overnight, single-family real estate prices across the country have nowhere to go but up. And that reality isn’t budging any time soon.

Rising home prices necessitate new buying models and changing consumer attitudes are driving tech adoption. A number of these trends are further discussed below:

(1) Consumers prefer digital experiences: There is rapid adoption of digital tools utilized during the home buying process, including popular listing platforms like Realtor.ca. Nearly all buyers (95%) use the Internet in their home buying process, up from 37% a decade ago.

(2) Rise of non-bank lenders and alternative credit: The rapid rise of non-bank lenders like Quicken Loans, loanDepot, and Caliber Home Loans. Today nonbank lenders represent the majority of mortgage originations in the US. These lenders are often more willing and able to embrace technology in service of providing a better customer experience.

(3) Property and buyer data has been digitized: Important in enabling new transaction models is the availability of data to accurately underwrite individual properties and borrowers.



These trends in conjunction with the acceleration of digitization due to covid are presenting compelling opportunities for technology in the residential real estate space. It is something everyone in the real estate space should be keeping an eye on.

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