The real estate industry’s future is in constant flux, and 2024 is anticipated to bring significant changes. From embracing sustainable living to utilizing virtual reality software for real estate transactions, there are a number of trends in the real estate sector that warrant exploration. The future of real estate will be driven by new technologies, buyer-agent relationships, and changing homeowner demographics. Real estate investors hoping to achieve success will need to learn to thrive amidst these changes. With new software to speed up closing timelines, online listing sites resulting in more informed buyers and new age groups entering the real estate market, the industry is transitioning in big ways. Even expert predictions suggest impending market changes. All in all, when it comes to the future of real estate, investors have a lot to look forward to.
What are the Trends?
Following are some of the real estate trends to watch for in 2024.
Sustainability
Sustainability has transitioned from being merely a trend to becoming an integral aspect of daily life. In 2024, prospective homebuyers will prioritize eco-friendly amenities and energy-efficient residences, leading to an increased demand for sustainable living spaces. A survey revealed that 81% of global consumers hold a strong preference for companies committed to environmental improvement goals (NIQ). As companies increasingly embrace eco-friendly real estate development in the current economic climate, it becomes imperative for real estate agents to familiarize themselves with this movement to guide their clients effectively.
In the upcoming years, the real estate sector is poised for a substantial transformation, with builders and developers increasingly embracing green building practices. These practices include the integration of solar panels for sustainable energy generation, the implementation of rainwater harvesting to conserve water resources and cut utility costs, and the adoption of energy-efficient windows that minimize heat transfer. Furthermore, green roofs are gaining popularity for their multifaceted benefits, such as insulation, improved air quality, and the absorption of rainwater by up to 65%. Notably, office buildings with green roofs have demonstrated a positive return on investment (ROI) of up to 225%, contributing to cost reduction (Derudder,2023). The trend towards zero-energy homes, emphasizing energy efficiency and sustainability, is also anticipated to play a pivotal role in shaping the future of the real estate industry.
Decentralized Finance
Real estate investors are continually exploring avenues to facilitate secure transactions and enhance income generation. Emerging technologies, having already disrupted the finance sector, are now poised to impact various industries, including real estate. Cryptocurrencies and blockchain technology, in particular, are anticipated to revolutionize the landscape of real estate transactions. This transformation promises heightened security and efficiency in the process. A noteworthy example is a real estate investor in Kyiv (2021) who successfully purchased a house using Bitcoin, showcasing the practical integration of cryptocurrency in real estate dealings (Pathe, 2022).
Moreover, the current real estate transaction process is burdened by multiple parties, a prolonged timeline, and unnecessary resource wastage. Tokenization offers a solution by dividing properties into tokens, enabling fractional ownership and simplified investment. Also, smart contracts automate and secure property transactions, minimizing the reliance on intermediaries, lowering the risk of fraud, and ensuring a smoother selling process.
Remote Work
The remote work trend is changing property preferences as people no longer require close proximity to their workplace. This shift has generated growing interest in suburban and rural areas. Remote work played a significant role in the 24% increase in housing prices between November 2019 and November 2021, contributing to over 60% of this growth (Kmetz et al., 2022). Moreover, hybrid models are poised to blend traditional and online real estate services, presenting a fusion of the best elements from both approaches. The National Association of Realtors (NAR) acknowledges the importance for real estate agents to monitor and adapt to this trend. If property developers and potential buyers can find common ground and facilitate such arrangements, there is nothing hindering this trend from becoming the norm in 2024.
Additionally, for individuals seeking a fully online experience, digital tools offer the ability to search for properties, attend virtual tours, and complete transactions. However, for those who value hands-on support, real estate agents are available for live assistance. Buyers and seasoned investors can access a comprehensive database containing information on properties, neighborhoods, market trends, and various community resources. This empowers them to compare options, evaluate potential investments, and cross-reference information from online listing sites.
AI and Machine Learning
The global IT market in real estate is anticipated to experience a Compound Annual Growth Rate (CAGR) of 10.32% from 2023 to 2028 (Mordor Intelligence, 2022). Undoubtedly, Artificial Intelligence (AI) is poised to play a pivotal role in the real estate sector, particularly in providing accurate forecasts, data-driven insights, workflow automation, streamlined content marketing, and more. AI has the potential to revolutionize various aspects of the real estate market, including analyzing images and videos of properties. It can even estimate home values based on its observations and the current housing market.
Additionally, machine learning can analyze historical property sales, market fluctuations, and demographic information. This enables staying ahead of shifts in housing demand, monitoring market conditions, and predicting factors such as mortgage interest rates, housing shortages, and new home sales. Natural Language Processing (NLP) in real estate streamlines communication through chatbots and virtual assistants, providing instant responses to inquiries and scheduling viewings. This technology is particularly valuable when dealing with real estate investors who seek fast, accurate, and personalized replies.
Virtual Reality
The adoption of virtual reality (VR) for property tours is set to revolutionize the real estate industry. In 2024, real estate agents leveraging VR technology will have a distinct advantage, enabling them to assist clients in exploring properties from any location globally. The utilization of VR tours and augmented reality (AR) applications will empower real estate investors to view a larger number of properties effortlessly. Also, by 2025, the incorporation of Virtual Reality (VR) in real estate is projected to generate a substantial $2.6 billion in earnings (Derudder, 2023). This underscores the transformative impact and growing significance of VR in reshaping the property exploration and investment landscape.
With VR tours, clients can be transported directly into the homes of interest in mere seconds, offering a realistic virtual walkthrough. This advanced technology saves time and money for both buyers and sellers, diminishing the necessity for in-person property visits. It is poised to become an integral part of the home buying process, emerging as the new norm, with a substantial increase in demand for VR tours expected in the upcoming months. Companies like Matterport are already witnessing heightened requests for property digitizing services, utilizing this technology to transform any space into a digital resource ready for exploration.
Conclusion
The challenges looming over brokerages and realtors in 2024 are undeniable, marked by limited choices, escalating rent prices, and a surge in home costs amid rising interest rates. Simultaneously, developers are grappling with the emergence of new trends in the real estate industry. In the face of these obstacles, characterized by heightened prices and stringent timelines, property owners are striving to optimize each deal and maximize sales prices. Given this landscape, a prudent business strategy is imperative, one that not only acknowledges these prevailing trends but also delivers added value. In adapting to the evolving dynamics of the real estate market, staying attuned to buyer constraints, and addressing the needs of property owners, businesses can position themselves strategically in the challenging terrain of 2024.
References
Derudder, K. (2023). The Future Of Real Estate Industry: 9 Trends to Watch For In 2024 | Xara. Xara Cloud. Retrieved January 1, 2024, from https://www.xara.com/blog/the-future-of-real-estate-industry-trends/
Kmetz, A., Mondragon, J., & Wieland, J. (2022, September 26). Remote Work and Housing Demand. San Francisco Fed. Retrieved January 1, 2024, from https://www.frbsf.org/wp-content/uploads/sites/4/el2022-26.pdf
Mordor Intelligence. (2022). Real Estate Technology Market – Trends & Analysis. Mordor Intelligence. Retrieved January 1, 2024, from https://www.mordorintelligence.com/industry-reports/it-market-in-real-estate
NIQ. (2022). Brands of the Naturally M/O Fellowship Blog 2. NIQ. Retrieved January 1, 2024, from https://nielseniq.com/global/en/landing-page/brands-of-the-naturally-m-o-fellowship-blog-2/
Pathe, T. (2022, March 20). Kiev, Ukraine – May 1,t 2021: Buying Property with Cryptocurrency. Buying real estate with bitcoin. Gold bitcoin coin, model house on gray background. property. Copy space. The Fintech Times. Retrieved January 1, 2024, from https://thefintechtimes.com/crypto-to-crib-bitpay-ventures-into-reit-with-first-crypto-real-estate-offering/kiev-ukraine-may-18-2021-buying-property-with-cryptocurrency-buying-real-estate-with-bitcoin-gold-bitcoin-coin-model-house-on-gray-background-proper
This article is written by Haneen Gul. Haneen is a research analyst at the Iqbal Institute of Policy Studies (IIPS).
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