In 2009, the phrase “There’s an app for that” became so pervasive in techie culture that Apple trademarked it. The tagline represented the idea that our smartphones could fulfill our every need.
In 2020, we’ve expanded past single apps. Technology has reached a point where an idea is no longer just an individual product but an entire industry of apps, platforms, and businesses. Banking apps have become fintech, mobile communication with your doctor is now called telehealth, and for all things real estate, we have the very convenient term proptech.
Proptech, short for property technology, is the use of software (or any form of information technology) to optimize the real estate or property management process. Though the concept hasn’t been around for long, those who have used proptech as first-time home buyers, renters, or sellers probably couldn’t imagine doing things the old-fashioned way.
Here’s an overview of the proptech industry as well as some ideas about what the future may hold.
When did proptech start?
Pinning down a specific year is difficult, but the mid-2000s is a good estimate of when proptech companies started to spring up. It began when real estate companies started putting both commercial and residential property listings online.
The online real estate company Zillow appeared on the scene in 2004, and its website followed shortly after in 2006. Creator Rich Barton believed technology paired with real estate was a strong enough combination for him to leave his job at travel site Expedia. The first year at Zillow wasn’t easy, but with the new satellite view feature on Google Maps, the company was able to combine the bird’s-eye view of American neighborhoods with a decade’s worth of housing market data.
The years following Zillow’s entrance onto the real estate scene were riddled with new proptech companies, including Airbnb in 2008, WeWork in 2010, and Compass in 2012, to name a few. The money investors have pumped into the proptech industry over the past 10 years has been staggering. According to RE:Tech, venture capitalists contributed more than $12 billion to the industry globally in 2017.
What are the different types of proptech?
Whether you’ve personally used technology to find your home or big tech manages your workplace, the real estate technology industry today is expansive. Though there are several ways to break down the industry, A/O PropTech and Andrew Baum of the University of Oxford identify the four main verticals as follows:
Smart real estate
- Includes companies that focus on real estate operations and management
- Provides info related to buildings and assists with building management
- Company examples: Buildium, Yardi Breeze, Anabode
- Includes companies that focus on “occupier markets”
- Facilitates information exchanges and transactions between property owners and occupiers
- Company examples: Airbnb, Vrbo, Homestay
Real estate fintech
- Includes companies that assist with trading real estate assets
- Can directly perform transactions or provide information to buyers and sellers
- Company examples: Zillow, Redfin, Opendoor
ConTech (construction technology)
- Includes companies that work in building construction
- Best serves engineers, designers, and architects
- Company examples: Strukshur, Katerra, Join
What’s in store for the future of proptech?
As with many sectors of the tech industry right now, immersive reality, artificial intelligence (AI), and big data are just some of the factors projected to influence proptech in the 2020s.
Proptech and immersive reality
The coronavirus pandemic has forced even the most sociable activities inside and online. In addition, the stress of being quarantined in cramped living quarters has pushed many city dwellers to the suburbs. Enter immersive reality as the perfect addition to the proptech space.
We can split immersive reality into two parts: virtual reality and augmented reality. Virtual reality provides an experience to the user through a real-time, 360-degree world, while augmented reality allows users to enhance the existing world around them, often through smartphone apps or smart devices.
So how is this technology affecting proptech? For starters, virtual home tours exploded in popularity in 2020 due to the pandemic. Just as in-person office spaces became a not-so-essential aspect of working, touring a home in person may also become a thing of the past.
According to data from Zillow, in June of this year, the average amount of time homes spent on the market was only 22 days. With homes flying off the market so quickly, it’s no surprise that the home search process will need to speed up as well. Buyers will be able to put an offer on a house within just a few minutes of viewing it virtually from their smartphones.
Proptech and AI
Though many online real estate platforms have used chatbots to aid home buyers, we’ll have to wait and see whether proptech will be able to use artificial intelligence successfully. If AI analyzes historical housing data and pulls information from a dense hub of real estate advice, this could eventually eliminate the need for experienced Realtors to provide assistance within the platform. But we’re not quite there yet.
According to Forbes, the path to AI fully replacing human interaction within the proptech sphere is still far off. Even if we do manage to reach a level of intelligence that takes the place of a Realtor, we’ll still need their expertise to ensure that our proptech robots get the proper information from which to extrapolate advice.
While the proptech industry is certainly no stranger to automation, it will be interesting to see how it turns this into artificial intelligence in the next 10 years.
Proptech and big data
The number of proptech platforms that have cropped up over the years is actually securing the industry’s future. That’s because the amount of data that users collect via sites like Zillow, Trulia, and the like are making proptech sites more intuitive and, as discussed earlier, allowing artificial intelligence to learn from industry trends.
Big data is helping real estate platforms make more educated predictions, and in turn, home buyers are getting a more accurate depiction of the market. For example, when a home sells on Zillow, the data instantly factors into the home-buying process for other users.
The proptech industry has been using data for years, but big data will continue to create a much more personalized experience within real estate. The data mined through our use of social media, our interaction with ads, and our use of search engines may assist us in buying and renting property more than we even consciously know.