2021 was an exciting year for the real estate industry—mortgage rates hit historic lows, home values soared, and buyer demand surged. As many consumers looked to buy their first home, move locations, or refinance their mortgage amid another year of pandemic uncertainty, a simple and seamless real estate transaction became more important than ever. These four 2021 trends indicate what may be to come for real estate transactions in 2022.
1. More states legalized remote online notarization (RON)
In 2021, many states passed laws to permanently legalize remote online notarization (RON) after temporarily allowing RON as an emergency measure during the beginning of the pandemic. New York was one of the most recent states to permanently allow RON—joining ten other states that legalized RON in 2021, including Alabama, Arkansas, Illinois, Kansas, New Hampshire, New Jersey, New Mexico, Oregon, West Virginia, and Wyoming.
As more states passed RON legislation, lenders and title companies looked for more opportunities to implement RON and other digital closing options for consumers. Many businesses expanded their closing options for clients by offering RON eClosings and hybrid eClosings in addition to more traditional offerings to give consumers the ability to choose how they’d like to close. The MBA’s Technology Profile Survey indicates that more consumers are leveraging digital tools during the mortgage and closing process. For example, 89% of lenders indicated that the majority of borrowers leveraged eSigning technology during the mortgage process compared to 79% in 2020.
2. Venture capital poured funding into real estate technology in response to changing consumer demands
According to PWC’s Emerging Trends in Real Estate 2022 Report, COVID-19 has dramatically increased technology adoption in the real estate sector—particularly around the consumer experience. Venture capital firms quickly recognized the opportunity to participate in a rapidly-transforming industry and poured money into real estate technology companies in 2021.
As reported by GCA’s PropTech Market Update for Q3 2021, venture capital invested $13 billion through September 2021, setting a new record for total funds invested in the real estate sector. Additionally, The Center for Real Estate Technology & Innovation (CRETI) found that VC PropTech funding bounced up by 28% compared to 2020.
3. iBuying experienced a rocky 2021 but continues to grow
One of the most notable stories of 2021 was Zillow’s announcement that it was shutting down its Zillow Offers iBuying program after launching it in 2018. Zillow CEO Rich Barton explained in a press release that “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated, and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.” Although Zillow has suspended its program, the iBuying movement continued to grow in 2021, according to research from Mike DelPrete. With Zillow’s departure, Opendoor became the world’s largest iBuyer with a market cap of just over $9 billion. Additional iBuyers include Offerpad, RedfinNow, and Knock.
iBuying presents a compelling offer for consumers—especially sellers. The traditional home selling experience can be an uncertain and drawn-out process. iBuying aims to offer a simple and fast way to sell homes, which adds increased certainty to the selling experience.
4. New homeownership models continued to grow
While many millennials want to purchase a home, they are often priced out of homeownership—especially in competitive markets—due to mounting student debt and reduced inventory for affordable housing. Over the past few years, new PropTech companies have emerged with an intent to disrupt the market by providing new models for homeownership. PropTech companies offering new ways to buy and sell homes such as Divvy Homes, Homelight, and Landis continued to gain momentum with significant capital raises in 2021.
These new models are gaining a greater share of the market as they mature. How widespread the adoption gets remains to be seen as potential buyers get more comfortable with them and weigh them against more traditional ways of buying and selling.
Interested in hearing more about the technology trends impacting the future of real estate? Register for the Future of Real Estate Summit taking place in Austin, Texas April 4-6.