The three most important attributes for any property are location, location, location—or, at least, that’s what we’ve heard for the past many decades. But does this hold true in today’s globalized, hyper-connected economy?
Technology is transforming the way we live and work and the decisions we make. Location is still important, but in an age of improved mobility for businesses and customers, the relationship and interdependence between physical and virtual spaces has changed drastically. As technology continues to evolve, its impact on the real estate industry will get even stronger.
Shop From Anywhere
One area that has seen major change due to improved mobile connectivity is e-commerce. The U.S. Department of Commerce reported that e-commerce sales for the first quarter of 2015 were estimated at $80.3 billion, a 14.5 percent increase from the first quarter of 2014.
“Our children have been born into a digital environment where technology offers them an extension of—never a substitution for—their physical spaces.”
Retailers are looking to balance the number of physical stores that provide strong reinforcement of their brand characteristics while also expanding their online platforms. Futurist and author Scott Steinberg maintains that it is crucial for these two components to complement each other.
“Many people assume that e-commerce is a complete and total replacement for brick-and-mortar shopping,” he says. “But in actuality, there’s room for both to play.”
Steinberg says technologies such as augmented reality are changing the way we shop. The Layar app, for instance, is an augmented reality platform that uses cameras on devices like smartphones to inject virtual elements into real-world images in real time.
However, there is still value in researching products online and then either trying them out or purchasing them at a brick-and-mortar retailer.
“Our children have been born into a digital environment where technology offers them an extension of—never a substitution for—their physical spaces,” says Adolfo Ramírez-Escudero, president, CBRE Spain and recent author of El Nuevo Paradigma Inmobiliario, published in El Mundo.
Flexible Options Across the Globe
Technology has also changed the way consumers find accommodations. Today, most people younger than 30 find housing to rent or buy only through online portals such as Airbnb or Trulia.
This has resulted in a major shift in the decision-making process. For example, a greater number of people have switched from buying summer homes to exchanging accommodation with strangers in other countries. The reason: The latter offers broader, more flexible options that can be tailored to the consumer’s desired lifestyle.
Technology has also changed the way consumers find accommodations.
That could mean renting a house in Honolulu to go surfing for a week, another home in Barcelona to practice Spanish for a month, or finding a serene spot in Bali for a year of reflection.
“Location is fluid and adapts to people’s needs,” says Ramírez-Escudero.
The era of flexibility is also expanding the customer base for homeowners. “The marketing and exposure of a vacation rental now reaches a truly global audience,” says Jon Gray, chief revenue officer for HomeAway.
“In the past, if you had a home in Miami, you’d probably get Central Floridians, Georgians and some visitors from the islands. Now you are hosting French, Spanish, British, African, Russian travelers—you name it—because they found your home online.”
And, for individuals who have an entrepreneurial spirit, improved mobility can provide opportunities to build creative destination-style settings to rent out. (Look no further than the New York City man who turned his apartment into an arcade.)
“We’re going to see more and more individuals who start thinking like property managers or destination coordinators,” says Steinberg. “They’ll think, ‘We can’t build The Wynn in Vegas, but what other fun, unique experiences can we create that might draw people to come and stay in our city?’”
Live and Work Anywhere
Flexible occupancy is changing the office sector as well. Online portals can now connect people looking for temporary office space with those who have extra space to offer. This means employees no longer have to be tied to urban areas five days a week—they can live where they wish and avoid, say, a two-hour commute to work or the added stress and higher prices of a city.
“It doesn’t really matter whether I am in the city center or on the outskirts when all the information I need and access to the people I work with are connected through a mobile device,” says Ramírez-Escudero.
The increasing urbanization of global populations is a trend that will only continue to grow. However, technology has helped create alternatives for those not drawn to burgeoning urban centers.
“Interaction between the physical and virtual worlds is clearly a reality across nearly everything we do—how we shop, socialize, live and work.”
“People can actually have a much better quality of life and still have a lot of the conveniences they had in their prior larger town,” adds Terry Denoux, broker-owner, Better Homes and Gardens Real Estate Northwest Living in Bend, Oregon. “That makes a big difference. You’re going to see a lot of these small communities start to take off and grow.”
What do these changes mean for the future of residential real estate agents? With the age of DIY upon us, are they an endangered species? No, but their role is different. Residential brokers can no longer simply show a place to a client—they have to provide additional layers of insight about the community that cannot be found online. It’s about creating an experience for the client.
Steinberg agrees. “Customers are more informed and certainly choosier now, but an experienced agent will be able to offer the expertise, know-how and trusted insight that people look for,” he says. “There’s no replacement for a tried and true residential real estate agent that’s worth his or her weight in gold.”
“Interaction between the physical and virtual worlds is clearly a reality across nearly everything we do—how we shop, socialize, live and work,” says Ramírez-Escudero. “It would be short-sighted to think that increasing connectivity isn’t going to redefine what constitutes ‘location’.”