It’s been a tumultuous couple years for the real estate industry. The pandemic sparked a housing boom unlike ever before, with remote workers making the move across state lines and investors quickly buying up an already limited inventory. These days, new homes are off the market just as quickly as they are listed. Through all the changes in the real estate industry, PropTech has taken its place at center stage as technological developments that were once low on the totem pole are now being prioritized to better meet buyer demands. One example is the rise of e-closing technology, which Forbes says is gaining popularity to facilitate the growing demand from real estate investors who are looking to purchase properties from out of state.
In short, PropTech, or property technology, is technology used in the real estate industry to manage and improve transactions and interactions from beginning to end. While it first emerged in the early 2000s, it has developed a strong footing over the last five years or so, establishing itself as a mainstay, especially in the early days of the pandemic when in-person interactions were limited or non-existent. PropTech made it possible for real estate sales to continue during COVID, but it has exploded in ways that no one predicted.
The Center for Real Estate Technology & Innovation reported that more than $32 billion was invested in proptech companies in 2021, so we can expect to see a lot more PropTech innovations in the coming years. Mike S. Shapiro, Co-Founder + Managing Director of Plunk, an AI-driven property valuation platform, recently wrote an article for Forbes highlighting the impact of PropTech today and where the industry is headed.
The article breaks down PropTech’s impact on industry insiders, consumers and investors and takes a look at where the industry is heading. We’ve highlighted some key takeaways below.
PropTech’s impact on industry insiders:
Gone are the days of excel spreadsheets being the primary way to manage data. While concise, this form of data lacks interconnectedness, and according to Shapiro, “this interconnectedness is key to optimizing efficiencies throughout the system, simplifying and speeding the process.”
Shapiro says most “PropTech companies are succeeding in simplifying processes and building efficiencies in an industry that hadn't experienced much significant change in centuries.” Changes which he believes will “continue to evolve in a positive direction as data becomes more efficiently integrated across all the elements of the transaction process.”
PropTech’s impact on consumers:
The pandemic reshaped the role of PropTech for consumers, creating the ability to do video tours and make online offers to close sales online, sparking the creation of “ibuying,” which brought the entire process online.
Shapiro says “in my view, sellers were the true winners when it came to proptech advances in an exploding market.”
PropTech’s impact on investors:
Shapiro says PropTech’s role for real estate investors is “to simplify the process, increase efficiencies and, ultimately, drive profitability. Another key is the simplification of the rental process, including applications, approvals, rent collection and property management.”
All-in-all, he says investors have greatly benefited from PropTech advances.
Where is the industry heading?
As PropTech continues to rapidly evolve, Shapiro states that “its efficiencies will likely continue to drive profitability, opportunity and innovation.” Considering PropTech is still relatively new and has already made such an impact on the real estate industry, it’s an exciting time for this growing market as new tech innovations continue to take shape to meet consumer demands.