Venture capital poured into real estate technology in 2019, with $12.9 billion raised in the first six months alone — more than any year in history. As of November 2019, this figure is up to $16 billion.
While this multi-billion dollar funding spans a variety of areas within real estate (everything from investment in coworking spaces to technology to improve the landlord/tenant relationship), there is growing investor interest in the real estate transaction itself. In fact, Qualia was one such company that received funding in 2019.
The real estate transaction process started to gain attention from technology companies in 2004 with incumbents like Trulia and Zillow improving the home search process. This year however, the transaction process—spanning financing and closing—started to shift. These four 2019 trends indicate what may be to come for real estate transactions in 2020.
1. Online home search continued to dominate the first part of the home buying journey in 2019
According to a 2018 National Association of Realtors (NAR) survey, 93% of homebuyers search online to gather information at some point during the home purchase process. Google search trends validate the upward trajectory of digital home searches. Google reports indicate that online home searches reached their highest volume ever in 2019.
Average Google Search Interest for “Home for Sale” (Scale 0-100):
|Year||Online search interest (scale 0-100)|
|2019||90 (as of December 9, 2019)|
Search trends also demonstrate that real estate aggregation sites themselves are increasing in search volume. Google Trends reports indicate that search results for “Zillow” and other popular real estate sites are growing year-over-year.
Search volume for “Zillow” over time
Consumers now accept real estate aggregation sites like Zillow and Redfin as household names. Both of these businesses now say they want to capture the entire purchase experience and transform how people buy and sell homes. In other words, both companies are placing larger bets in iBuying. Due to their high brand recognition, Zillow and Redfin’s entry into the iBuying arena caused interest in iBuying to explode in 2019.
2. iBuying took off in 2019
Real estate technology companies including Redfin and Zillow took the leap or plunged deeper into iBuying this year.
While Zillow launched its iBuying platform, Offers, in 2018, Offers rapidly expanded to new markets in 2019. Most recently, Zillow expanded its iBuying capabilities to Los Angeles—its largest market to date. “In the 20 months since we first introduced Zillow Offers, we’ve seen that there is a strong appetite for another option when it comes to selling a home,” Zillow Brand President Jeremy Wacksman said in a press release.
Opendoor, one of the first iBuyers to enter the market in 2013, continues to lead the field, with purchase totals reaching nearly 10,000 homes in 2019. Investor interest in iBuying and Opendoor’s vision for the future of real estate purchases moved the iBuyer purchase needle significantly. As of April 2019, Opendoor had raised $1.3 billion in equity and is valued at close to $4 billion.
In addition to investor interest, real estate technology experts, such as Mike Delprete, have recently narrowed in on iBuying—providing deep analysis on its market influence and projected impact.
3. eClosing legislation passed at record speed
This year, legislation in several states alleviated some of the legal constraints surrounding eClosings. The most noteworthy of those legislative changes were those surrounding remote online notarization (RON). 12 states passed laws authorizing remote notarizations (bringing the total to 22 states). Additionally, 7 states proposed RON bills in 2019.
During a regulatory outlook webinar hosted last week by October Research and Qualia, Executive VP & Chief Underwriting Counsel at NATIC, Valerie Jahn-Gradin, noted that 2019 was a big year for eClosings and RON legislation. “We moved fast in 2019 toward national implementation,” she said. “This is really unusual in my experience to see so many sectors working together to make this happen.”
According to a 2019 American Land Title Association (ALTA) survey, changes to state laws have a significant impact on title & escrow companies’ digital closing implementation timelines. More than 800 title professionals were asked: “what factors would be most likely to change your digital closing implementation timeline?” The second-highest rated factor was “changes to state laws.”
4. Attention turned to automation for streamlined transactions and improved consumer experience
Businesses across industries are capitalizing on the benefits of automation, and real estate is no exception. This year, automation software spending across sectors is expected to total more than $1.3 billion.
Paul Levine, former COO and President of Trulia, says automation in the real estate transaction and closing process presents more than $100 billion in untapped potential. “To me, [the real estate transaction itself] is a 10x bigger opportunity than the opportunity that Trulia and Zillow and others sort of got so far,” Levine said at the recent Proptech CEO Summit.
Upcoming Future of Real Estate Summit speaker and realtor.com executive, Ben Rubenstein, also believes artificial intelligence (AI) and automation will have a significant impact on the real estate transaction. “We’re leveraging data to help connect home shoppers with the right agent for them,” he said. “We analyze thousands of data points on consumers and agents to make a match, and use applied analytics to help drive higher close rates.”
Interested in hearing more about the technology trends impacting real estate in 2019 and what’s to come in 2020? Register for the Future of Real Estate Summit taking place in Austin Texas January 14-16.