The future of the real estate industry is always evolving, and 2024 promises to be a year of great change. If 2023 was difficult to keep up with...
Source: “The Future Of Real Estate Industry: 9 Trends to Watch For In 2024” by Kimberley Derudder for Xara.
The future of the real estate industry is always evolving, and 2024 promises to be a year of great change. If 2023 was difficult to keep up with, wait until we delve into some of the upcoming housing market trends of next year.
From sustainable living to selling real estate with VR software, there are a lot of real estate trends to unpack.
Without further ado, let’s explore nine industry trends that are reshaping real estate.
1. Sustainable living spaces: 81% of consumers demand environmental improvement
Sustainability is no longer a buzzword, but a way of life. In 2024, homebuyers will focus on eco-friendly features and energy-efficient homes. This will drive the demand for sustainable living spaces.
In a recent Nielsen survey, 81% of global consumers strongly prioritize companies with environmental improvement objectives.
In this current economic climate, companies are getting to know eco-friendly real estate development. Thus, agents will have to understand this movement to guide their prospects.
Green Building Practices
In the coming years, the real estate industry will undergo a significant transformation. Builders and developers will adopt green building practices, such as:
- Solar panels
- Rainwater harvesting: This practice conserves water resources and reduces utility costs.
- Energy-efficient windows: They decrease heat transfer.
- Green roofs: These insulate buildings, improve air quality, and absorb rainwater by up to 65%. Green roofs in office buildings also show positive ROI (up to 225%), as they help reduce costs.
- Zero-Energy Homes: These homes produce as much energy as they consume.
So, the question arises: Will these trends become the norm in the upcoming years? If the future of the real estate industry means sustainability, real estate agents must keep this aspect top of their minds.
2. Virtual reality tours: $2.6 billion in earnings estimated by 2025
The use of virtual reality (VR) for property tours will change the real estate industry. In 2024, real estate agents using VR will have an edge. They’ll be able to help clients explore properties from anywhere in the world.
Using VR tours and AR apps, real estate investors can view more properties with less effort. In fact, by 2025, the use of Virtual Reality (VR) in real estate is estimated to bring in a massive $2.6 billion in earnings.
Immersive Experience
Picture this scenario: You’re a real estate agent receiving a call from a couple looking to buy their first home in New York City (United States). They live out of town, making it challenging to visit properties in person.
With VR tours, you can transport them right into the homes they’re interested in in seconds. This enables clients to explore a lifelike virtual property walkthrough. Such technology saves both buyers and sellers time and money, reducing the need for in-person property visits. It will soon become crucial in the home buying and home purchase process, and be the new normal. We can expect a high buyer demand for VR tours in the coming months.
Companies like Matterport are already experiencing huge demand for property digitizing services. Using this technology, you can turn any space into digital resources ready to explore.
3. AI and Machine Learning: from $9.55 billion in 2023 to $15.61 billion by 2028
Did you know that the global IT market in real estate is projected to grow with a 10.32% CAGR during 2023-2028?
There’s no question that AI will play a pivotal role in real estate, especially when it comes to:
- Accurate forecasts
- Data-driven insights
- Workflow automation
- Streamlined content marketing
And so much more!
AI has the potential to disrupt every area of the real estate market, especially when it comes to:
- Computer Vision. AI can analyze images and videos of properties. The system can identify elements like room sizes, property condition, or any issues. It can even estimate home values based on what it notices and the current housing market.
- Machine Learning. AI can analyze past property sales, market fluctuations, and demographic information. Using this data, AI can forecast property values. It can also identify emerging real estate industry trends to help you stay ahead of shifts in housing demand. AI can help monitor market conditions and trends, enabling the prediction of mortgage interest rates, housing shortages, and new home sales.
- Natural Language Processing (NLP). In real estate, NLP streamlines communication through chatbots and virtual assistants. These can offer instant responses to inquiries, or even schedule viewings. This technology is a great asset when dealing with real estate investors who want fast, accurate, and personalized replies.
4. Decentralized Finance (De-Fi)
Real estate investors are always on the lookout for ways to secure transactions and generate income. In the real estate sector, emerging technologies already disrupted finance, so De-Fi can work with other industries too.
Cryptocurrencies and blockchain technology will transform the way real estate transactions take place. It will make them more secure and efficient.
In fact, in Kyiv (2021), a real estate investor already bought a house using Bitcoin. How awesome is that?
Tokenization of Properties
The current real estate transaction process involves:
- Too many parties
- A lengthy timeline
- A waste of resources along the way.
Using tokenization, one can divide properties into tokens. This allows fractional ownership and easier investment.
Smart Contracts
Smart contracts will automate and secure property transactions, reducing the need for intermediaries. Here’s how a smart contract works:
- A buyer and seller agree on a price and conditions
- A smart is created
- The contract will transfer ownership of the property once funds are in escrow.
This reduces the risk of fraudulent activities and ensures a smoother selling process.
5. Tech-Savvy Homes: 59% of Americans will pay more for smart homes
As technology becomes more and more integrated into daily life, smart homes are the new norm. Around 59% of climate-conscious Americans are willing to pay more for smart homes.
New real estate agents should be well-versed in smart home features, security systems, and IoT devices. This will help them meet the expectations of tech-savvy buyers.
6. Remote work’s impact on residential and commercial real estate: 64% of adults prefer a remote job
The remote work trend is altering property preferences. People no longer need to live in proximity to their workplace. This leads to increased interest in suburban and rural areas.
- Remote work contributed to over 60% of the 24% price increase in housing between November 2019 and November 2021.
- A majority of U.S. adults (64%) seeking or working a full-time job prefer a fully remote schedule.
7. Hybrid real estate models
Hybrid models will blur the lines between traditional and online real estate services, offering the best of both worlds. Even the National Association of Realtors (NAR) knows that real estate agents should keep an eye on this trend.
Just like in other industries, hybrid is a system that’s been proven to work over and over again. Real estate markets are no different.
If property developers and prospective buyers can meet halfway and arrange these scenarios, nothing stands in the way of this trend becoming a norm in 2024.
Personalized Services
For those who prefer a 100% online experience, they can use digital tools to:
- Search for properties
- Attend virtual tours
- Complete transactions.
Still, clients who value hands-on support can request the expertise of real estate agents live.
Data-Driven Decision Making
With a database on hand, buyers and seasoned investors seeking a good deal can access information about:
- Properties
- Neighborhoods
- Market trends
And many other community resources!
This allows them to compare options and evaluate potential investments, as well as compare online listing sites.
8. Affordable housing initiatives: this trend will grow to $84.7 billion by 2031
Luxury properties aren’t the only market worth tapping into. The affordability crisis in real estate is pushing for innovative solutions. The worldwide affordable housing market was worth $52.2 billion in 2021 and is expected to grow to $84.7 billion by 2031.
Agents should stay informed about:
- Housing grants
- Affordable housing programs
- Financing options for first-time homebuyers
- Other potential benefits for clients and sellers
Rising Mortgage Rates and Interest Rates Fluctuations
One of the key drivers of housing affordability is mortgage rates. If rates remain high, it could continue to scare potential buyers. On the other hand, a drop in rates may spur increased market activity.
Data from the NAR indicates a housing deficit of 5.5 million units. Rising interest rates and inflation are making it challenging to enter real estate investing and meet the demands of home buyers.
Access to affordable housing is crucial but seemingly impossible. Still, it holds immense ground for a large group of buyers who are trying to navigate rising interest rates and the unstable housing market.
Our advice? Keep an eye on mortgage rate trends, as they will tell whether it’s a buyer’s or seller’s market. Knowledge in the field will help you secure more deals with middle-class buyers. These make up a huge portion of the real estate market.
9. Rising home prices in 2024: NAR says prices will grow by up to 2.6%
As we step into 2024, we’ll notice major changes in the real estate industry. Among future real estate industry trends, surging home prices and ongoing inventory constraints are taking center stage.
Rising Home Prices
The housing market will experience a notable upswing, with home prices soaring 2,6%, according to NAR. This upward trajectory will increase competition among buyers, often resulting in multiple offers on properties.
Naturally, rising costs affect the rental market as well, as well as the occupancy of retail spaces. Still, even with a housing crisis going on, and local investors finding it hard to secure a winning strategy, the housing supply dictates. Data shows that housing costs and demand are on the rise.
Tight Housing Inventory
One of the most significant challenges facing buyers in 2024 is the limited housing inventory. This challenge comes with a historical low in housing inventory, down by 13.6% compared to the previous year.
