This post will break from our traditional research and analysis of the housing market to look (at a very high level) at the innovation that is happening in the real estate market with property/real estate technology (Proptech or REtech). A Financial Post article from this week estimates investments in Proptech at over $12 billion globally as of 2017 (https://bit.ly/2QZt9ij), and a PwC Canada blog stated the annual investment increase in the sector is $5 billion (https://pwc.to/2s2pS2N), so having some understanding of this new type of innovation will be helpful as it grows here in Canada.
The first thing to know about the advancement in Proptech innovation is that many believe the real estate industry to be wildly behind the modern business times. The industry has been painfully slow to evolve throughout the world (though TREB with holding sold data for so long does put them in a good leadership position in the resistance to change category), meaning that there is ample room for innovative improvements. It also means that steps being taken right now are playing catch up and in comparison to other industries may not seem all that innovative.
The technologies that are being developed today are predominately focused on two things: providing people with more information and making the process easier and more efficient. On the information side, tools are being developed for buyers/sellers, renters/landlords, developers and commercial realtors. They are trying to better inform buyers of potential listings and the general housing information they could need, sellers on predictive pricing, developers on potential issues and the commercial sector on anticipated financial benefits, to name a few of the attributes being built. As previously mentioned, in comparison to other industries these new tools may not seem that innovative, but they could change the traditional client/realtor relationship over time by making all parties more informed.
Turning to the investment into creating tools to promote ease and efficiency, these solutions are all designed to streamline the process. From creating sites for landlords to list and manage rentals to offering buyers and sellers one stop shopping for their entire housing transaction, the goal is to make finding or selling a home more seamless. Some of these tools are up and running and already helping people, while others remain a goal for the Proptech sector. It will be interesting to see what the future holds and how widespread these new sites and applications become.
This is also the area where you will hear about the opportunities that Blockchain could bring to the real estate sector. The hope is that Blockchain technology (made famous by Bitcoin) will enable the easy and trusted transfer of housing ownership without the need of banks, titles and lawyers. Please know though that while Blockchain has real potential benefits, nothing is as perfect as some people will tell you Blockchain is.
Property/Real Estate Technology remains in its infancy, at least in Canada if not globally, so it is far too early to tell how much it will change the real estate sector. People do not often buy CDs anymore, but malls are still packed around the holidays and most bank branches still have lines despite ATMs and online banking, so new technology does not always wipe the old way of doing something off the map. Technology is and will continue to make real estate information easier for the average person to access, which will hopefully lead to more informed decisions and purchases.
How technology could impact the cost of housing is likely the biggest question. Innovative practices could help cap or reduce some of the costs associated with buying a home like realtor and legal fees (don’t hold your breath on land transfer taxes though). However, it is unlikely to help make housing more affordable. Markets will likely continue to rise and fall for economic and population reasons more so than technological ones. Still, the thought of an industry largely stuck in its old ways adapting to modern technology is intriguing. We will see the impact Proptech has on the Canadian market as the investment dollars continue to flow.