Technological advances will continue to shape the real estate industry, which will be further influenced by the role of big data. But how will technology alter the industry? And what role will big data play?
56% of people found their home on the internet, according to the National Association of Realtors. With decreased in-person showings and more virtual ones due to COVID-19 restrictions, this number will likely increase, especially when considering that technology-adept millennials now make up a significant portion of buyers today.
Now, data is collected contemporaneously to show property owners everything from electric usage to tenant requests, to interest in their properties. Access to this data will continue to shape the future of real estate services and introduce new players to the market. Real estate stakeholders will need to be able to adapt their business models to stay in tune with the evolution of the industry and anticipate the needs of their clients.
Below, we discuss how data will shape the real estate industry and how real estate service providers can respond to these changes.
4 Data To Solve Property Management Challenges
Managing real property and commercial investments often involves the complex undertaking of knowing everything about the physical and fiscal aspects of a property. However, data can help meet some of the most profound challenges property managers face, including:
Today, one of the newest trends in data analytics is keeping track of the usage of energy and intertwining it with building management systems. Increasingly sophisticated systems can connect each piece of equipment together to help track data in real-time.
Building managers can set up systems to alert them when maintenance may be necessary or when energy variations are occurring. These systems can help you save money and anticipate problems before they become major issues.
#2: High Overhead
Many commercial real estate investors own several properties, but more acquisitions can result in higher overhead as a staff is needed to manage these properties.
Data analytics tools allow you to collect various data points to know critical information about your properties in real-time, such as your vacancy rate, the need for repairs, ongoing maintenance needs, and data related to systems in your properties.
This data can help you reduce staff time by automatically collecting vital information and freeing up human staff for other functions such as responding to requests from tenants or finalizing lease details with new tenants.
Data collection and analytics also allow property managers to conserve energy and make their properties more sustainable. Property managers can track Energy Star scores and regulate heating, air, and electric systems to conserve energy and reduce emissions.
In order to keep current tenants satisfied, property management companies must have a way of maintaining communication and tracking contacts with tenants.
Data portals allow tenants to create maintenance requests and track progress in real-time. For example, AppFolio lets tenants log on to pay their rent and submit maintenance requests. Owners can view these requests online, as well as view real-time owner statements and reports. Data analytics centers can also be established to schedule calls with tenants or third-party vendors and track communications.
Transformation Through Modified User Behavior
Data can also help property managers anticipate the ever-evolving needs of their tenants. For example, as more businesses respond to employees’ preferences for flexible job scheduling, buildings can become retrofitted for more flexible spaces and needs.
Based on user feedback, property managers can add the coveted technology, physical space designs, and new features to translate to commercial and residential tenants. This practice often involves the collaboration between human resources, information technology, and business operations to create an ideal work environment.
Builders can adapt their designs that often included close quarters and cubicles and transform them into more open spaces that are more conducive to today’s work environment, based on the data feedback that they receive from tenants. In this way, data shapes the future of construction because it allows builders to adapt their building plans to meet the needs of future tenants.
Additionally, builders can make their spaces more technologically savvy with built-in electrical and mobile device charging stations that allow people to work from nearly every angle in the building. Multiple businesses can often share the same space or use data to schedule conference rooms and other activities so that on-demand spaces are available when necessary.
Address Lookup Tools for Buyers
Buyers also have greater access to technology and data, such as through address lookup tools.
Address lookup tools allow you to input a physical address and get back critical information about the property and who lives there. Address lookup tools can help buyers obtain more information about communities where they are considering buying or renting a property, including:
- Crime rates
- Property values
- School zones
- Historical data
- Names of tenants
- Age of tenants
- Criminal records
- Relatives of tenants
- Social media accounts
Physical information about the home, including square footage, estimated home value, and the year the home was constructed.
6 Trends for the Coming Decade in the Real Estate Industry Thanks To Data
Big data points to the following trends in the real estate industry in the coming decade:
#1: Faster Deals
More accurate and predictive analytics can lead to faster and smoother transactions. More thorough data and multiple data sources that measure property values translate to more consistency in property values among real estate brokers, appraisers, and lenders.
Additionally, appraisers can create more detailed visualizations of properties, including enhanced visual maps and 3-D illustrations, which provides more clarity to investors and lenders alike when contemplating a lending or investment decision.
Ease of access to credit reports and other credit information may further speed up the process of acquiring a mortgage, reducing the amount of time it takes for a buyer to secure a mortgage.
#2: Artificial Intelligence Used to Make Deals
Artificial intelligence allows purchasers and properties to match up. Interested buyers can input the features they are looking for and computer programs can respond with properties that match them. Consumers can rely on recommendations that take into consideration their various preferences to make these connections.
#3: Real Estate Deals Completed Exclusively Online
With all of the data about buyers and the property already stored online and the continued separation caused by the COVID-19 pandemic, you’ll likely see real estate transactions that are completed completely online. More available data will make it easier for lenders and sellers to get the information they need to complete the deal, and ownership documents may be completed in real-time. Completing this work online can help reduce the cost and speed up the process. Soon, an all-online process may take over the tedious and time-consuming closing process.
#4: VR to Show Properties
After the COVID-19 outbreak, more home sellers and real estate agents will depend on using virtual or augmented reality to show homes and offer virtual tours. Consumers can get a better sense of how it may feel to live somewhere through these more immersive experiences. VR can also help consumers imagine properties that are under construction or currently being renovated.
#5: Shared Housing
Homeownership rates are now at lower rates, similar to those of the 1990s. This is because of several reasons. People are not getting married as often or as early in their lives, which also sometimes delays homeownership.
Additionally, more people are able to work in different environments or travel with their job, preventing them from having to stay in one place for a long time. Others are simply unwilling to take on large amounts of debt, especially when they still have large balances on student loans or other personal loans.
Some investors are responding by splitting the cost of homeownership between a few people. Just like with venture capital sites and programs that allow investors to make smaller investments with others, there will likely be more opportunities for interested investors to find each other. By pulling their resources together, they can benefit from the ownership of real estate without having to place as large a stake in the investment.
Interested investors will likely be able to search with various metrics like location, number of investments, and amount of desired investment to find suitable co-investors.
#6: Increase in Blockchain Technology
Blockchain technology automates processes by tracking transactions and grouping them together. There will continue to be new uses for blockchain technology in real estate transactions, including tracking:
- Title histories
- Property ownership changes
- Rent payment and lease histories
Using Data to Get More Satisfied Clients in the Real Estate Industry
When you can make connections in data, you can better anticipate the needs of potential clients and find properties that better suit their needs. You may have many sources of data that can help inform your recommendations, including:
- The real estate services that are currently highest in demand
- Listing and sales data
- Average property prices
- Appreciation rates
- Population data
- Economic data
You can use your knowledge of the current market and your resources to ask for referrals or make introductions.
Also, consider why clients are approaching you: What do you offer that your competitors do not? Do you have a specific niche that you are known for?
Try to leverage this expertise in your marketing efforts and to convey the value you can add to your targeted clients.
The Role of Predictive Analytics The Future of Real Estate Industry
Predictive analytics is helping regular investors compete with career investors in the real estate market. New sources of data are helping to identify valuable patterns and provide valuable insights that allow investors of all levels to make informed decisions.
Here are a few ways that predictive analytics are changing the real estate industry:
Improving the Home Buying Experience
Real estate agents can use data to understand the buyer’s journey and target them through marketing efforts like customized emails or social media messages that center upon interest points so that they can get involved in the process faster. This allows the real estate agent to better understand the needs of their clients so that they can make recommendations on properties that seem to meet the preferences of the buyer, saving the buyer time, money, and frustration.
Identifying Good Investment Properties
Reliable data is particularly important when making a decision about which investment property to purchase.
Predictive analytics can help investors determine whether a particular location has the necessary foot traffic to lead to a successful investment. Data can also highlight whether certain features have historically led to a greater return on investment and which neighborhoods have appreciated well over time.
Calculating Return on Investments for Renovations
If you are considering renovations, you may be wondering whether you will receive a good return on your investment. Predictive analytics helps take out the guesswork of these projects. You can use existing data on upgrades to similar properties and similar projects. This can help you prioritize your renovation projects or even determine whether or not to undertake a particular project.
Knowing this information upfront can also help sellers offer recommended changes that will help them yield a higher return after the purchase.
Planning New Construction Projects
Data can also help investors determine which sites to develop in the community. Data allows investors to identify which locations have historically been successful and will more likely provide a safer long-term investment. Developers can purchase land and build projects from the ground up that are customized to the needs of future tenants.
Data also helps investors research which types of features and characteristics are most in-demand so that they can build properties that embrace them and appeal to larger markets.
Data continues to shape the real estate industry. Whether it is through anticipating and responding to challenges or providing new insights, data can provide you with critical and real-time information to allow you to be a better investor.
Knowing how to harness the data you collect can allow you to earn a higher return on your investment and successfully manage your property.
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About the author
Ben Hartwig is a Web Operations Executive at InfoTracer who takes a wide view from the whole system. He authors guides on entire security posture, both physical and cyber. Enjoys sharing the best practices and does it the right way!