Traditionally, real estate prices have been determined mostly by the number of people moving in and out of an area, along with the availability of jobs, shops, and other opportunities for families. These factors then were summed in simple mathematical models and used by real estate agents to decide home values. But in reality, it’s a mix of factors that work in delicate balance with each other to determine trends in real estate markets.
Technology and software development companies have recognized the complexity of the real estate market and seen it as an opportunity to bring innovative solutions to one of the oldest markets in the world. In the short amount of time that these data-based companies have entered the real estate industry, they’ve fundamentally changed how market analysis is performed.
Here, you’ll find some of the key ways that big data – and the companies processing this data – are impacting the real estate industry.
Micro-trends Shaping Local Markets
One of the biggest impacts that big data analytics has had on the real estate industry is the exposure of micro-trends to a broad audience. The real estate industry has traditionally assumed that neighborhoods are generally the same throughout – even when a neighborhood has a block that’s entirely residential next to another block that has some restaurants or shops.
With the advent of big data analytics, the differences between blocks within a neighborhood have been exposed. The extra-fine detail allows homebuyers to understand not only the neighborhood they’re looking at better but also the specific street and surrounding area. In turn, this changes housing prices at a street level instead of a neighborhood-wide level.
Targeting Potential Buyers
The real estate market is primarily a buyer’s market – when a person or family is interested in buying a house in a specific area, they’ll start contacting brokers in that area. But big data analytics can find potential buyers even when they’re just beginning to search for homes.
Big Data is a powerful tool for making predictions, says Roy Dekel, CEO of SetSchedule, an AI and BIG Data software company geared toward real estate professionals. With Big Data, agents are no longer prospecting blindly, as behaviors can be traced and tracked. Industrious companies have started to capitalize on BIG Data to provide predictive markers indicative of buyers or homeowners need, improving a real estate agent’s efficiency in finding and reaching their target market.
This tactic works especially well for luxury homes, where buyers may not be looking in a specific area but instead are looking for a home filled with high-end features. Analytics can directly target these elite buyers, delivering potential homes that are suited exactly to their tastes.
Intelligent Construction
Before a property can even go on the market, it must be built or prepared for use. To do that, construction companies must partner with developers who have laid out a plan for developing an area of land for residential or business use – and those developers must be prepared to sink a serious amount of capital into that land long before any profits are realized.
But artificial intelligence – using big data, of course – can analyze exactly where and when to build. Multiple companies are using big data analytics to understand what the optimal building types are for a specific area.
While these data aren’t the first step of the construction process, Vice President of the real estate investment firm CA Ventures Jared Sullivan believes that the data can certainly inform decisions better than most human research can.
Informed, Personalized Property Information
Some deep learning and big data companies are using their analytical power to change how end users view real estate. Companies like Localize use big data to understand every aspect of a potential apartment or home when it gets posted to a marketplace, looking at factors that would otherwise go unmentioned like how much sunlight specific rooms get or how much noise a tenant would experience each day.
Because apartment and house hunting can be a time-consuming, arduous process, these big data companies can cut down on time investment by ensuring vacancy postings are telling the full truth. In turn, this can leverage other big data algorithms to glean how valuable property is on the market.
Even though real estate is one of the oldest industries in the world, technology companies are revolutionizing every step of the market process. Up-and-coming real estate tech company founders like Steve Kalifowitz understand that there’s an ever-increasing demand for correct information on properties posted to the Internet. Other founders recognize that there are more efficient ways to get houses sold to the right buyers, and are developing targeted solutions to deliver on-the-market houses to these future homeowners.
Of course, these companies are just the tip of the iceberg – as technology becomes more established in the real estate space and more data is collected, we will certainly see more big data companies emerge that could fundamentally change the real estate industry even more.
