Will Millennials actually buy homes online?
It is important to know who the Millennials are and for real estate agents to understand their impact of the real estate market. Millennials make up the generation that follows Generation X, and their birth years range from the early 1980s to the early 2000s. A large portion of Millennials is just getting to the age where they will dip their toes in the housing market, and there is much debate as to whether or not they’ll turn to the Internet as a source of home buying.
The question of whether Millennials will actually buy homes online is the subject of much debate. Millennials certainly make up the first generation to be fully immersed in the web, but will they follow the path of previous generations, using the Internet only to search for homes and instead purchase them in person? While they are the generation that is fully immersed in the web that does not necessarily mean that they are more willing to buy homes online. In fact, they may follow in the steps of Generation X and the Baby Boomers and instead prefer to only search for homes online, but buy them in person.
Credit S&P Dow Jones Indices
There’s some trepidation among industry professionals as to whether Millennials will buy homes in the numbers that previous generations have, and it’s reflective of the marketplace. Furthermore, there are questions surrounding the possibility of them using the Internet to purchase their homes, which would cause a major shift in how the real estate industry operates in the U.S. and later in the rest of the world. At the same time, there is also an increased emphasis on the foreign investors who have purchased real estate in the U.S. for years and years – the Japanese in the 1980s, the Russians at the turn of the 21st Century, and the Chinese today. The Chinese, in fact, may be in a much better position to make future purchases online thanks to a recent deal with the most popular real estate auction site in America, Auction.com.
The Advancement of Auction.com
Auction.com was constructed to sell real estate online, and it is currently the number one online portal for that in the U.S. Its future looks bright, seeing as Google Capital has already invested $50 million in the website and it has a $1.2 billion valuation. While the investment has been considerable, the interest in this website has grown as well, particularly with the Chinese who are looking to invest in American real estate opportunities. Juwai.com, the top international property portal in China, has formed a partnership with Auction.com that will give Chinese investors direct access into the commercial real estate market in America.
The collaboration between Auction and Juwai is remarkable because it can also open many possibilities in the U.S. residential market. Additionally, it is the type of union that is both exciting and troubling for a number of American real estate agents, many of whom are wondering if their way of life is going to change for the better or worse in the coming years.
How Real Estate Agents Will Be Affected by Technology
In 2014, 88% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69 percent in 2001. There was some time where people thought the Internet would cause agents and their services to become outdated and unnecessary, and that they would go the way of the dinosaur.
However, real estate agents and the value they provide have remained in demand. Even though agents have so far withstood the test of time, that has not stopped companies like Allre from trying to provide online services for real estate buys and sellers. Founded in 2012 by Kathy Dryden (formerly a traditional real estate agent) and Dave Mercer, Allre’s goal is to maintain a user-friendly platform that gives ordinary people the ability to safely and securely complete real estate transactions using the Internet.Allre has certainly experienced some success so far, but it is not taking up a great deal of the market as a whole.
Millennials have not yet responded to Allre and similar websites like some people may have expected, meaning a number of the online services are growing slower than they’d like. However, there are many other startups today that are improving the buying and selling process, all while continuing to value the input of real estate agents. Even so, that has not stopped some people from further, predicting the demise of the real estate agent due to advancing technology.
How Technology May Change the Role of the Real Estate Agent
Technology is continuously helping real estate buyers and sellers better understand the full value of a property and providing essential information that may eventually turn agents into a platform host rather than an active participant. Two advancing technologies include the 3D virtual tour as provided by companies such as Matterport which allows viewers to enter a three dimensional version of a home all while sitting in the comfort of their residence.
3D virtual tours are nothing new, but only recently has the technology been able to provide an accurate sense of what the inside of a home is like. One technological advancement is the 3-D virtual tour, which allows viewers the ability to enter a three-dimensional version of a house all while sitting in the comfort of their own home.
The premise of a 3-D virtual tour is nothing new, but the technology has recently been able to provide a more accurate sense of what the inside of a home is actually like. Another technological advancement is the increased use of video, which is what companies like Animoto and Veed.Me are doing.
They use short films to advertise properties, which in turn gives buyers another way to analyze and inspect potential purchases. Predictive analytics websites are also revolutionizing the real estate industry, particularly when it comes to investing. Propcy, for example, uses real-time analytics to determine which residential properties in New York City make the best investments.
Consumers may soon find as much data online as they can get from a real estate agent. In addition, the lending market is now delving into the web to make financing a new home even easier. Companies such as Lenda and Mortgage Hippo, for example, are now allowing buyers to get the loan they need for a home online so that way the entire purchasing process can be done without ever having to visit a real estate or lending office.
In short, the growth of technology is making every aspect of a standard real estate transaction much easier. But what does that mean for the current and future generations of Americans looking to buy a home?
So, Will Millennials Buy Online?
After a long journey through all the permutations of advancing technology, the question remains as to whether Millennials will be the first generation to purchase real estate online. Not many of them are doing so right now, but that is likely because Millennials do not have the financial means to do so.
The narrative might be quite different 5 years from now, and real estate agents will need to be quite savvy when it comes to using new technology and remaining an integral part of the transaction process.
