Property technology has been remaking the real estate market for years — from digitizing documents to streamlining regulatory challenges and simplifying property management.
That’s said, there’s still plenty of room to innovate—a recent KPMG survey found that only 58% of real estate companies have a digital strategy in place.
At the MIT Fintech Conference in March, and in followup interviews this month, executives from three companies — Landis, Bowery Valuations, and Hemlane — expressed optimism about the resilience of “proptech” during COVID-19 and shared predictions about the state of the real estate market in general. Their companies are representative of the types of technology and platform innovation that proptech brings to real estate.
Landis, for example, purchases homes as investment properties, then allows renters to buy them when they’re deemed financially suitable for a mortgage. The company relies on algorithms beyond those traditionally used by banks to help determine when renters are ready to buy.
Bowery Valuations aims to streamline the fragmented, often manual process of appraising commercial property with a data-driven platform and mobile app. The company’s technology combines public records, comparable sales figures, and other data to help its appraisers build custom reports faster and more accurately.
Hemlane’s platform allows owners of rental properties to manage their properties remotely, a concern during the pandemic. The platform gives owners access to tools for leasing and maintenance management as well as access to local services like inspections and rental showings. And tenants can use the platform to send messages to landlords, request maintenance, or pay rent online.
Those innovations and hundreds more add up to a hot market, said panel moderator Hannah Arnold, senior associate at F-Prime Capital. Real estate is one of the largest asset classes, and proptech offers “a lot of improvements to the way it's transacted, managed, and consumed,” Arnold said. “This space is exciting because it affects how we live, where we spend our time, and who we live with.”
Here are four predictions from the companies’ executives:
1. Data will drive a transformation in real estate. “It’s astounding how messy real estate data is,” said Tom Petit, co-founder of Landis.
As part of its diligence process, Landis gathers extensive property and consumer data including appraisals, inspection reports, repairs, bank statements, and disclosure forms. “This information is rarely standardized, and we see faxes of copies of PDFs sent all the time,” he said.
The real estate market “is a huge industry; it’s trillions of dollars, and we have an incredible opportunity to better structure data and use it to create win-win situations that benefit consumers,” Petit said.
2. Tech will help streamline the regulatory environment. Dana Dunford, CEO and co-founder of Hemlane, said the real estate affordability crisis correlates in many parts of the country with heavy regulation, something proptech can help with.
“One example is here in Massachusetts. Security deposits must be held in a separate bank account from the rental income,” Dunford said. “It’s a huge administrative burden for landlords. Automating this process to set up and manage accounts makes it much easier to work within those regulatory environments.”
3. Virtual reality will become more widespread. “Imagine that nobody commutes anymore, and everything is ordered on Amazon or something else, and we’re all just on a couch tied in to virtual reality,” said Noah Isaacs, the co-founder and co-CEO of Bowery Valuation. “I think that will fundamentally change real estate, and I think we’re kind of scarily close to that.”
4. Remote work will open up some markets, depress others. COVID-19 “makes residential real estate more important than ever,” Petit said, noting that his entire workforce works remotely as of now, thanks to technology and the internet.
“There’s more flexibility in where people might want to live. They don’t need to be as close to the city center anymore,” Petit said. “I believe that it’s going to change where people choose to live, and I'm curious to see how that impacts residential real estate markets.”
Isaacs agreed. “Suddenly your commute to work becomes less of a driving force when it comes to picking what you're willing to pay for and where you want to live.”
The road ahead
Pandemic economy notwithstanding, Isaacs remains optimistic about growth in the market — banks are still ordering appraisals, he pointed out, and there is still a need to digitize antiquated processes.
“Every company is going to be affected to some extent by a downturn, but there’s so much opportunity in this space to create something amazing and new,” Isaacs said.