Proptech’s Role in Homebuying
There was a period post-recession in America in the 1930s right up until the 1960s that has seen significant overhauls in the property market. A combination of young war veterans, a market that needed stability and a country that needed to match job growth to a booming population has seen the structure for mortgages, loans and every aspect of homebuilding get a complete overhaul.
In this instance, it was the role of one country to prop its economy and real estate market through innovations that pretty much remained in place until the most recent property recession in the mid-2000s. Around this time and soon afterwards, with the global markets watching, the need for an overhaul that matched the property market with current lifestyles and technologies came to the fore.
Leading the charge through all of this, for everyone from the investor looking to start major developments to the individual browsing property apps on their phone, has been Proptech. It continues to re-imagine how homebuying and the property sphere operate to meet the demands of people and new technologies.
Let’s take a look at its role, what it currently does, and where it will soon lead us.
photo/ mohamed Hassan
Proptech’s current role
You’re looking to buy a house that hasn’t been built yet. There are a multitude of factors at play that determine whether or not your new home will be ready on time. Proptech is the unseen force that helps everyone from the investor to the contractor to the real estate agent to the lawyer make their role more manageable.
The term itself (property + technology) is extremely broad and rightly so. How we build and buy houses is entirely different to how it was carried out years ago. As Proptech law firm Goodwin puts it “Steady digital and technology disruption is impacting companies across industries” and as such any company in the property sphere has to engage and develop.
A very basic example of this would be looking at properties in your area to buy or rent. Two of the most popular sites in the U.S. for doing this are Zillow and Trulia. Many people will browse both sites or have both apps on their phones, even though the technology and interface are similar. This is more than just a coincidence
What most people don’t realize is that Trulia is owned by Zillow, which raises the question, why isn’t there just one company? That is where the future role of Proptech comes into play
Proptech’s future role
So why wasn’t Trulia just absorbed by Zillow and kept as one entity? It highlights the steps many companies involved in merger & acquisition are leaning on that keep the industry diverse just now.
Large equity firms like CBRE and Blackstone would, in the past, push funds towards acquiring startups that develop new Proptech technology. That isn’t the case anymore. A growing trend is for equity firms to invest in a portion of a company instead. The last decade was all about mergers and acquisitions as startups were few and far between.
Proptech though is an industry where new technologies are continually being developed for hospitality, leisure, leasing, construction and finance. For every Airbnb there’s a Vrbo, Flipkey, Homestay and dozens more. And it’s hard to see which companies are going to push through a crowded market.
The next few years will see rapid growth in Proptech. It may be less the case that there’s going to be a bubble so much as a whimper when individual startups come to the fore.
So, what does this mean for homebuyers?
In short, the evolution of Proptech is going to make buying (and selling) homes much more straightforward. Big Data will make better estimations on property, and realtors will have easier access to completing everything from appraisals to escrow handling.
App development will make the relationship between constructors and those building a new home more simplified, while suppliers will be getting paid more quickly.
It will ultimately lead to fewer bumps in the road for the average homebuyer, and that’s only a good thing. So next time you take a look at a property site, consider how Proptech is there working away to make every decision easier. In a few years, we could end up with a system where buying a house is as easy as one-click shopping on Amazon.
Author: Jerry Clifford
