Real Estate – Takeaways From Real Estate Tech In 2017

Real Estate

Real Estate – Takeaways From Real Estate Tech In 2017

Real Estate – Takeaways From Real Estate Tech In 2017

By Joshua Fraser

Real Estate – We can always count on the new year to be a fixture in the news cycle to reflect, rank and highlight the notable and newsworthy events of the last 12 months. For the real estate tech sector, 2017 was immensely fruitful and continued the upward trajectory of investments and new technologies. While the final numbers aren’t in yet, the total dollar amount invested in the sector is expected to reach record numbers, topping the previous year by 25% and reaching $3.4 billon.

I have had the privilege of being a part of this industry as the CEO of a company that’s been developing data aggregation solutions and building consumer products since 2014. We started with a Carfax-inspired business model for homes and recently closed an investment round led by Foundry Group. Along the journey, we’ve seen peers and competitors reach new and unprecedented heights in funding and profits. With new press releases seeming to come out every week, staying on top of all the new technologies and following the paper trail of investments can be dizzying. Below are some of the key moments of 2017 that stood out to me as promising advancements and indicators of where the sector is going in 2018 and beyond.

Reinventing The Listings Service

While the bracket of real estate listing services continues to expand and diversify, the standout company of the last year has been the luxury real estate sales service, Compass. Compass works primarily as a listings service but also as an extensive network of real estate agents, making it easier to connect people to prospective houses than ever before. Compass is also fresh off a $450 million investment from the SoftBank Vision Fund — according to Compass, the largest real estate tech investment in U.S. history — and now has raised $775 million in total.

While the size of the investment says enough about the impact and footprint Compass and its investors made on the year, its positioning is what is most intriguing and even controversial to others in the sector. Historically, real estate has been chock-full of promise and potentiality, but the larger industry had been relatively slow in adopting new technologies and still remains fragmented between sectors. What Compass has done brilliantly is grow its agent population at an incredible rate, blurring the lines of being a real estate brokerage and a technology company. As it continues to find strength in ambiguity, all signs point to Compass expanding its service to every major U.S. city and future IPO plans.

Market Growth Across The Pond

The United Kingdom has embraced real estate technology for years, birthing giants like RightMove and Zoopla and newer beasts like Purplebricks and Nested. The U.K. leads with the world with the highest percentage of early-stage deals in real estate tech with a 63% deal share, according to CB Insights, and is second only to the U.S. in total number of real estate tech deals.

While much of the U.K. proptech revolution is following the example of larger splashes made in the U.S., 2017 saw the success of very diversified and distinguished companies.

Tech For Landlords And Managers

Rental fever is not just a phenomenon occurring across the pond; it’s also happening right in front of us. U.S. homeownership rates are on the decline, and the millennial generation continues to pour money into the rental market. More rentals, of course, means more relationships, touch points and property management, and we are seeing startups both local and abroad take advantage.

The Data Revolution

Property data still stands as the backbone of the entire industry but has remained stiff to new technologies and disruption. The reason for this becomes clear once you investigate the process that companies go through to find data and organize it. With MLS data being extremely inaccessible and other sources being scattered among county websites in antiquated formats, it becomes quite the feat to not only procure the data but to systemize it and make it intelligent.

HouseCanary is perhaps the current unicorn in the property data sector, having a massive year scoring big round after big round with their latest round of $31 million. HouseCanary’s analytics engine is sharp and accurate and is far and away their deadliest feature. With a team filled with Ph.D.s and plenty of data know-how, HouseCanary’s forecasting tool is one that currently has no competitors.

The year ahead is lined up to surpass the new heights reached in 2017 with many millennials beginning the process of buying their first home. I predict transparency will be a key theme throughout the year, along with education and data democratization. Data will become widely available versus the current siloed and disparate state. Stay tuned.

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