Monday, February 9, 2015

■Property on The Move

It’s a truism in Silicon Valley that technological disruption creates business value. Yet as many failed startups can attest, disruption does not automatically translate into success. Timing matters as much as disruption itself: many dotcom-bubble-era companies that went bankrupt, from grocery delivery to pet services, are today thriving businesses in different forms. Put simply, the right technology must combine with the right behaviour, sufficient scale and the right economics, at the right moment. In America’s property sector, that moment is now. As a ­result, in the coming year the industry will start assuming the shape it will take for the next decade, and a cascade of innovation should follow.

Property has value, but until recently the information that lets consumers understand and capture that value remained fragmented and opaque. With the surge in mobile technology, the increasing sophistication of big-data analytics and processing, and the beginnings of a new breed of property business, change is now happening. Millions of people are easily able to view information about homes, commutes and neighbourhoods, and over the past year most consumer engagement with the leading real-estate sites has started taking place on mobile platforms.

The property industry will have to respond to all this. Three big shifts are in prospect. First, we’re going to see completely different participants in the market on both sides of the transaction. A new generation of buyers and renters is already influencing the way people search for properties. They are more connected to mobile technology than even the early adopters of the past ten years. With 92% of consumers using the internet as part of their property search, the pervasiveness of mobile technology, with its extra dimensions of location and immediacy, will create new and valuable experiences. Starting in 2015, a new generation of brokers and agents will join the industry as well. They too will be attuned to the fact that mobile technology is essential to running their business.

Second, we’re going to see faster, less anxious, more informed decision-making. After years of research and experience, we know that buying a home is not just the largest financial decision most people make. It is also one of their lengthiest and most doubt-filled financial transactions. The decision to make a piece of property a home will always be unique to every person. But over the next decade more and more buyers and sellers will accept that they can quickly eliminate many of the adjacent uncertainties around that decision (regarding schools, crime, commutes, neighbourhoods, local services), thanks to the spread of online and mobile tools.

Eventually, this means that what we call the “messy middle”—the period between the waning of the buyer’s initial enthusiasm for a property and the moment they feel ready to buy it—will shrink. The average purchase cycle for a home is now 18-24 months. It will start to become shorter in 2015 and get closer to 12 months, or even less, over the next five years.

Third, as basic property information becomes ubiquitous, so service and branding will become essential differentiators for companies in the industry. You already see this in markets such as Britain and Australia.With home-buyers younger, tech-savvier, better informed and more decisive, real-estate professionals will get more creative in how they manage their relationships, provide insights and guide people through the process. The importance of personal attention and service remains paramount in property, so expect to see more agents investing time in building a comprehensive online presence, through increased use of social media and maintenance of detailed agent profiles, where they can demonstrate their experience and expertise to people everywhere, not just those they know in the neighbourhood. This emphasis on transparency should improve the level of service the industry offers.

Ripe for innovation
I have always believed that property—more than any other sector dependent on technology—needs to be treated as a two-sided marketplace. Because of the size and complexity of the transactions, the best real-estate technology, rather than eliminating the intermediary, should actually strengthen the role of professionals working in the industry, as well as improving the consumer experience. But this assumes that the professionals understand they are now fully exposed to a demanding consumer marketplace. The time is ripe for that understanding to bear fruit. Experts expect the housing market in 2015—both in the United States and globally—to see an increasing number of homes listed for sale and modestly growing demand. If so, the stable recovery is the perfect time for the industry to take risks in a connected marketplace that has finally achieved critical mass.

By: Pete Flint, chief executive, Trulia
Source: The Economist From The World In 2015 print edition

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