According to the Federal Reserve of the United States, real estate is valued at an estimated $40 trillion which makes it the largest asset class in the country. Due to this, it is no longer surprising for TechCrunch to report that in the last quarter of 2014, venture funding and real estate tech firms reached almost $300 million.
Venture capital firms are companies that backup the likes of Uber, Instagram and Buzzfeed. They are actually pouring a lot of money into these rising tech startups while residential listing and brokerage app Compass has managed to lure talents from tech giants like Google and Twitter. Redfin has reinvented real estate brokerage through the combination of advanced technology with full service brokers to raise $71 million. However, in spite of significant progress there are still big gaps in several areas and problems that require solutions.
In spite of the growth of real estate at an immense pace, technology in multi-family real estate sector has been lagging. The sector was able to contribute more than $1.3 trillion to the US economy in the form of jobs, construction, management, operational expenditures and renter spent in smaller communities. Americans are also choosing rental housing because of the decrease in the number of married couples with children. Baby boomers have also begun to downsize and are now moving to apartments or condos. Millennials also choose to be rent for mobility, comfort and financial reasons.
By 2023, more than 4 million new renter households will be created but by 2030 at least ¾ of these households will be childless. It is expected that there will be a surge in new rental listings. However, if renting is new owning why are personal checks still being written in order to pay for rent in 2015? According to research about 78% of renters prefer paying their rents electronically but the industry is only able to collect about 30% of payments online. The real estate industry has not caught up to the increasing demands of these particular amenities.
However, it is pretty clear that the entire process of leasing and buying property will eventually take place online with documentation and payments including automated selection of house and agent.