With strong demand driving average prices up to unaffordable levels and soaring interest rates that jumped from just over 3% in early 2022 to over 7% today, getting your foot on the property ladder is far harder than it once was. But, in many ways, the house-buying process has also become far easier to navigate than in the past. We have property technology, or proptech, to thank. Rather than searching far and wide for the perfect home, prospective buyers can fine-tune filters to suit their budgets and needs on property portals, view 3D models of the homes they’re interested in through virtual reality, and use platforms powered by big data to understand whether the property they’re bidding on is good value for money. As the CEO of , a new construction homes marketplace, I’ve seen the drastic difference proptech is making in a difficult market, and I believe the rapid rate of innovation will continue to see proptech thrive regardless of the volatility in today’s property landscape. NewHomesMate The Rise of Proptech: Plotting the Market’s Growth (2010-2023) Like many modern technologies, proptech found its origin in the early days of the Internet as the real estate sector sought ways to streamline time-consuming processes such as underwriting and accounting. However, it wasn’t until the 2010s that proptech really took off. The sector benefited from increased innovation and a surge of funding as investors looked to find real estate’s next big thing. Between 2010 and 2019, global investment in proptech skyrocketed from just $600m to over $20bn. In that time, we saw an abundance of proptech companies such as Compass, Airbnb, and Opendoor blossom into unicorns with billion-dollar valuations. Despite the pandemic causing the market to stall momentarily — with investment falling by 30% year-over-year — interest in proptech has risen to new heights in the current decade, most notably marked by Zillow’s 370% jump in value between January 2020 and February 2021. Of late, the issues facing the property market, such as high mortgage rates have had a knock-on effect on the proptech market. However, with interest rates having stabilized and people having accepted the new normal, there are positive signs that proptech will return to a positive trajectory in the years ahead. The U.S. Proptech Market in 2024: Trends and Predictions With the economy on the up, what does the future hold for proptech, and how can industry players capitalize on current trends to make 2024 a successful year? With the Federal Reserve having kept interest rates stable in the early stages of 2024, the worst of the economic downturn seems to be behind us. With businesses having a clearer picture of how their finances will look in the near future, they can stop focusing on survival and start investing in innovation instead. A return to growth: According to a recent Inman Intel survey, many industry players had already transitioned into a new growth phase. A year ago, securing funding seemed near impossible for tech startups. However, the Center for Real Estate Technology and Innovation (CRETI) has predicted a 15% increase in proptech seed funding and a 20% increase in Series A and B funding in 2024. Total funding is still far below previous years, but it’s a sign that confidence in the sector is growing again. Fresh funding: It’s no surprise that artificial intelligence will have the biggest influence on proptech in 2024. Latest figures show that AI-focused proptech startups raised over $4bn in funding in 2022 alone. AI everything: With over 500 companies currently developing tools that will benefit the real estate industry, plenty of useful solutions — AI demand forecasting, AI search, AI user analysis, and more — are now coming to market. With ChatGPT having shown the potential of advanced text generation tools, proptech companies will be on the lookout for ways to improve the buyer’s search experience through increased personalization. Increased personalization: Soon enough, one-size-fits-all property listings will be replaced by tailored recommendations and descriptions that help to sell homes faster. Sustainable demand: With many countries aiming for drastic emission reductions by 2030, there isn’t long left to meet these lofty targets. With real estate one of the largest polluters, producing around 30% of all global emissions, sustainability is becoming an even greater selling point for proptech companies — More so than profits and productivity for those committing to achieving net zero. 2024 and Beyond: What Does the Future Hold for Proptech? A few shaky financial years have tested the foundations of proptech and the wider real estate market. However, with the Fed expected to cut interest rates by more than 1% over what remains of 2024, mortgages will become more affordable in the months ahead. This will increase activity, which is great news for the real estate market, as well as the technology suppliers that they rely on. With emerging technologies such as AI and augmented reality becoming an essential among real estate players, proptech appears set for a period of sustained growth regardless of the challenge ahead. Valued at more than $25bn in 2022, the market is tipped to grow by 15.8% annually until 2030, reaching a total value of $81bn by the end of the decade. That isn’t to say the spell of uncertainty is over. That’s why NewHomesMate continues to experiment and implement new technologies to streamline the house-buying process, despite having secured over $80m in sales during one of the housing market’s most difficult moments in recent history. With the pandemic-inspired boom and sudden cooldown having offered a sharp reminder of how quickly the housing market can turn, providers should expect investors and customers alike to proceed with caution. Only the sturdiest of proptech businesses — those that offer exceptional value and continue to develop their offerings using the latest technology — will survive. The article uses data and materials from the following sources: “Are Home Loan Rates Ever Going to Drop? Mortgage Rates for Feb. 20, 2024”, Katherine Watt, CNET https://www.cnet.com/personal-finance/mortgages/todays-rates/mortgage-rates-for-feb-20-2024-rates-increase-for-prospective-buyers/ “Most homes for sale in 2023 were not affordable for a typical U.S. household”, Jennifer Ludden, NPR https://www.npr.org/2023/12/24/1221480443/most-homes-for-sale-in-2023-were-not-affordable-for-a-typical-u-s-household “When did the term "Proptech" start?”, Davis Wells, https://www.unissu.com/proptech-resources/When-did-the-term-Proptech-start “Value of investment into proptech companies worldwide from 2010 to 1st half 2022” Statista https://www.statista.com/statistics/951857/global-proptech-investment-value/ “Market capitalization of Zillow”, https://companiesmarketcap.com/zillow/marketcap/ “Market capitalization of Redfin”, https://companiesmarketcap.com/redfin/marketcap/ “Proptech Sector Gears Up for Growth: 2024 Market Forecast Reveals Promise”, BNN correspondents, BNN https://bnnbreaking.com/finance-nav/business/proptech-sector-gears-up-for-growth-2024-market-forecast-reveals-promise/ “AI and the evolution of proptech”, JILL https://www.jll.co.uk/en/trends-and-insights/workplace/ai-and-the-evolution-of-proptech “Has Proptech Funding Turned the Corner?”, Phillip Russo, Commercial Observer https://commercialobserver.com/2023/10/proptech-funding-2024/ “What To Expect From The Fed’s Remaining Meetings Of 2024”, Simon Moore, Forbes https://www.forbes.com/sites/simonmoore/2024/02/12/what-to-expect-from-the-feds-remaining-meetings-of-2024/ “The Proptech Revolution Is Coming. How Can Developers Know They’re Investing In The Right Tools?”, Julia Troy, Bisnow https://www.bisnow.com/philadelphia/news/proptech/the-proptech-revolution-is-coming-how-can-owners-and-developers-know-theyre-investing-in-the-right-tools-122445 “Proptech in 2024: VCs, Principals and Analysts Sound Off”, Phillip Russo, Commercial Observer https://commercialobserver.com/2023/12/proptech-2024-trends-investment/ “PropTech Market Size, Share & Trends Analysis Report By Property Type”, https://www.grandviewresearch.com/industry-analysis/proptech-market-report
