In my 20-plus years in organized real estate, I have found it incredibly valuable to source ideas, best practices, and processes from leaders of other industries that have already developed solutions to problems still on the horizon in real estate. From unpacking evolving consumer behavior to data scaling and collaboration, there’s a wealth of experience pointing the way forward that the real estate industry can learn from.
It may sound odd that organized real estate and the aerospace industry can learn much from one another, but in a number of ways we share some powerful parallels. For instance, both have measurable impact on the U.S. economy. Both are known for massive structural inertia. And both are currently at an inflection point, simultaneously facing both rapidly changing consumer demand and significant external challenges from regulatory scrutiny, technological advances changing the economics, etc.
Challenges specific to organized real estate include a broad sense of loss of control by brokers and agents over the transaction, over real estate property information, and over transactional data. Yet, rapidly shifting consumer demand is pushing for greater access and control of their own transaction and related data—and is outpacing the ability and/or willingness of many in the industry to meet it.
Like real estate, the aerospace industry faces massive supply shortfalls, which in turn challenge product delivery to clients. They also face technological advances from electric propulsion/green energy powering the potential for a consumer shift to local point-to-point travel, and away from the existing airline hub and spoke model. Different products, maybe…but perhaps we’re not so different after all.
Learning from the best
I recently read a great book, “Skunk Works,” by former Lockheed Martin CEO Ben Rich about the legendary top-secret engineering wing of his company. Ben’s story centers on the Skunk Work’s extraordinary ability to overcome challenges and build revolutionary aircraft nobody thought were possible. What caught my eye was the consistency of a common theme throughout the story; Skunk Works engineers actually plan for the inevitability of change.
Intellectually, we all know that change never stops, but to actively plan for it is largely unprecedented. Now, the intriguing thing about the Skunk Works is that they view themselves as creators, driving change and molding the world to their vision.
So, it got me thinking about organized real estate and how we typically approach problems. How could real estate benefit from a new way of thinking? What could a brokerage, a technology provider or an MLS look like—how would we all adapt our business to take a proactive approach like the Skunk Works and build drivers of change into our ethos? What if we knew what the future will look like because we are the ones driving it?
The purpose of this paper is to give insight into 10 things that will affect the future of real estate. I am as certain about these predictions as I was pushing for MLS and data consolidation, ringing the bell about the value of data, and arguing for the critical need for a broker/MLS owned national website more than a decade ago. If you care to dig in on how my other futurist articles fared against reality, my LinkedIn profile with article links is here.
The 10 inevitable changes coming to real estate:
- The metaverse mirror—Next to “location, location, location,” probably the most famous real estate statement is the National Association of REALTORS® Code of Ethics Preamble, “Under all is the land.” Until the invention of the internet, there was no other truth, yet now there exists a multiverse of online realms where unique, wholly owned digital “property” can be bought and sold using very real, very big stacks of money.
Largely unregulated and largely speculative, there is no “one” metaverse and each is in competition with one another. No one can know which metaverse(s) will become the de facto virtual real estate “world(s)” of the future, but the uncontested fact is that virtual real estate will be built, offered for sale and purchased. Equally inevitable is that buyers of metaverse real estate will seek professional help finding, valuing, and purchasing. There are already a few bleeding-edge brokerages working this space, so consider this the call to action to create a new designation to educate experts in this area.
- Data hangover—Consumers love tech in their homes and internet connected “smart” devices are rapidly becoming expected features of properties. From smart doorbells, to thermostats, entire HVAC systems, smart blinds, refrigerators, and surveillance, smart devices are collecting mountains of data on the property they are in and the owners who use them.
Apple, Google and Amazon understand that with connectivity comes the ability to share data between devices, which is why they set aside their differences and agreed to a standard network technology called “Matter” to improve connectivity standards. Despite the fact that they are in competition with one another, all three companies recognize that, at scale, cooperation on connectivity benefits them all. Sure, they could each try to dominate individual markets, but on a national scale, the costs of segmented operating systems, unstandardized data, and overlapping/partial data sets hurts the company and the consumer more than cooperation does.
Clearly, consumers are adding smart devices to their properties at a furious rate, which in turn collect massive amounts of information on the property and the consumer. There is a window of opportunity for organized real estate to come to terms with the demand for smart devices, develop rules around how to treat them as a part of real property, create guidelines for the transfer of ownership/administrator access, and standards on how to handle the data derived from these devices. In the absence of the industry stepping up to define a path forward, the answers to these questions will be solved independent of industry guidance or control.
Inevitably, property-specific real estate data will be gathered, normalized and leveraged to take yet one more slice of the transaction and sell products and services back to the industry that originated it.
- Regulation picks up steam—Despite ongoing dedication and efforts by the National Association of REALTORS® to protect REALTOR® and consumer interests, I think it’s safe to say that involvement of the Department of Justice rarely results in less regulation. There’s a lot on the table right now, but in my mind, there are two standout inevitable changes:
- A prohibition on the listing agent setting the buyer’s agent commission.
2. Ending the rule against commingled data
- Regionalization of MLS data—I’m a huge Yankees fan and as gratifying as it is to see them play to their potential this year, as I watched them make it into the post season it occurred to me that Major League Baseball offers a government-approved model of regulated monopolies that could work for MLSs.
Picture two leagues: REALTOR®-owned (National) and non-REALTOR®-owned (American) that are allowed to define MLS territories (markets) within their overlapping purview. Each MLS (team) is responsible for their own data input, gathering, normalization, and syndication of data for the benefit of participant brokers. Each MLS has rights to make decisions about data in their own territory, but in the interests of the consumer are required to share their data in a standardized format with every other “team” (MLS) and every other “player” (broker/agent) of every other team in the league. Every broker has the ability to switch “teams”—or even leagues—if they find a better business decision elsewhere, because even though MLSs have defined territories where they are responsible for business decisions, the data broker’s need to do business is available at any team.
Though specifics may be different from what I’ve described above, change to the MLS model is inevitable because revolutionary steps in data collection, data usage, exponential improvements in AI matching algorithms, aggressive speed to market product requirements, and consumer, broker and agent demands are evolving more quickly than most MLS’ ability to meet them.
- Air mobility e-VTOL (electric Vertical Take Off/Landing)—As an aerospace geek, this one is near and dear to me. For anyone not paying close attention to what’s happening in aerospace, after more than $5 billion being invested at last count in 2021, “flying cars” (optionally piloted, point-to-point, vertical takeoff and landing aircraft) are close to approval by the FAA, China, and the EU. Companies like Joby, Vertical and Archer are building 4-6 passenger electric aircraft that are quieter and cheaper than a helicopter, can take off and land in a reasonably sized parking lot, and offer a range of about 100-250 miles at speeds up to 200 mph.
When eVTOL is introduced, anyone living near an e-VTOL hub can have a 60-mile commute to any downtown metro area in a traffic-free 15 minutes. Just as proliferation of the automobile created the American suburbs, e-VTOL’s promise of on-demand mobility will inevitably change how communities are built and where people will choose to live and work.
- Specialized services—As consumer demand for real estate becomes more specialized to meet unique buyer requirements (think, “find me buy-to-rent opportunities in 30 states,” or “find me a waterfront home with a deep water dock, a safe room, on town water/sewer, at least 25’ above sea level and with smart solar panels”), real estate agents will begin to specialize in smaller and smaller market segments, filling a need for information experts in niche areas of their profession. Much like how, as our knowledge in various medical fields expands, so too do physician specialists to serve those emerging fields, real estate will inevitably move towards highly specialized brokerages servicing unique client needs across multiple markets.
- Evolution of the property search—Think about doing a search on Zillow, realtor.com® or Redfin; they all basically work the same way and ask the same questions. The only real differentiators between them is the data (markets) they have access to and the superficial differences of their UI/UX.
But what if they’re asking the wrong questions?
A smart disruptor will change property search by asking different, more focused questions to better understand what is actually important to the buyer. Instead of starting with a limitations box (min/max, defined area, etc.), they will ask what is important to the buyer: Is security important to you? Newly renovated? Smart technology? By the way, kudos to Zillow for introducing a multi-location search capability which is an important step away from fixed criteria.
Indicating that “security” is important to a buyer can have multiple different answers including everything from a physically remote location with no neighbors, to a privacy fence or a top of the line security system—potentially critically important factors to a buyer that would not have been known preferences using current methodology.
Property search will inevitably evolve from the standard, cookie cutter, “one size fits all” buyer input form to a behavioral/personality questionnaire analysis of customer preference, matched by AI property analysis to search returns.
- Out of this world, baby!—With private space companies comes privately owned space—in space. Theoretically, a spaceship isn’t real estate, but to my thinking as soon as it is placed in a stable orbit it’s pretty similar to parking a mobile home on a lot—but with a world-class view and eye-watering economics. The reality is that privately owned vehicles in space or on other planets is coming, which inevitably means consumers wanting to lease or buy space on those vehicles are coming, too. Like the metaverse, it’s also inevitable that consumers will desire professional help to search, value, identify and transact on extra-terrestrial real estate.
Consider this the call to action for the National Association of REALTORS® to define what it means to own space, in space and on non-terrestrial land.
- Water will always find the lowest point—Climate change may be the most obvious of the inevitable changes listed above, but it is also the only change that will affect the land itself.
Real property will be lost permanently to rising sea levels or stripped of value by extreme climate variations (drought, fire, crop-killing floods or frosts, etc.). The real estate industry is best positioned to identify the risks to real property, begin the discussion and planning for how those risks will be mitigated, and begin resourcing solutions to what happens next.
Density in cities will go up, pressure on resources like arable land and fresh water will go up, electricity demand from buyers looking for homes with A/C will go up, expenses will increase due to transportation infrastructure failures along the coasts and the list goes on. If we choose to seize it, the opportunity is there for the real estate industry to begin taking a leadership role in planning to protect not just property, but our homes.
- Un futuro combio—Strangely, the last inevitable change on my list is also the most overlooked. According to Forbes, 13% of the U.S. population speaks Spanish at home. With a current population of 329 million, that’s 42 million people that would prefer to conduct their real estate business using Spanish.
Other than some good work by the California Association of REALTORS® and a handful of MLSs in Florida and Texas, there have been no systematic efforts to embrace Spanish-speaking clients with a real estate search capability in the United States. Providing Spanish language search requires more than simply translation; the database must be built in the Spanish language from the ground up. Requiring significant resources to be done correctly and with the appropriate data standards, this should be seen as a call to action for brokers, MLSs and REALTOR® associations to collaborate on a single, national, Spanish-language, property search.
Speaking purely from an economic standpoint, this is a grossly overlooked market with massive potential. Inevitably, someone will wake up to the need—and if that someone is not the National Association of REALTORS® or the Council of MLSs, another significant opportunity to meet emerging consumer demand will have been permanently separated from the industry that created it.
Plan for the change you want to see
At the end of the day, Skunk Works engineers faced many similar challenges to what is coming for real estate, but they never stopped planning for what was over the horizon.
In the post-WWII era when the U.S. needed to see if there was a missile gap with the U.S.S.R. (there wasn’t), they built the revolutionary U2 (TR-1) that could fly higher than the missiles sent up to knock them down. When missile technology inevitably caught up, the Skunk Works had already planned another revolutionary leap forward with the SR-71 Blackbird. The Blackbirds used incipient stealth, ballistic speed (literally, faster than a bullet) and edge-of-space height to successfully evade all attempts to shoot them down.
Logically, using conventional thought, conventional products, conventional governance structures and conventional leadership will produce a conventional result. Yet, most people would agree that the pace of change has accelerated to the point where convention has not successfully kept pace with change. Now that you know at least a little bit of what the world will look like in the future, it’s time for the real estate industry to plan unconventionally for what comes next.
Cameron Paine is a futurist and industry veteran with more than two decades of thought leadership as an executive with top proptech brokerages, MLSs, and Associations. He is Vice President of Industry Relations & Head of Brokerage for HouseCanary.