Balancing the Scales: How Proptech is Helping Solve Inequality in the Housing Market 

More than 100 leaders in the real estate business were polled, and two-thirds responded that using new technologies was a strategic goal. There are several explanations for this.

• Effective real-time data collection and utilisation
• Enhancing effectiveness while cutting costs
• Gaining access to new sources of income and raising income
• Data on the environment, society, and governance (ESG) can be accessed as new metrics.
• Choosing investments more wisely

The COVID-19 epidemic has also had an impact on the industry, with techniques being employed, for example, to solve the problems associated with conducting real estate transactions and managing properties remotely.

In addition to giving users more ways to interact with the market and facilitate quicker and easier transactions, digital platforms may give real estate professionals a competitive edge and enhance and personalise the buying experience, which will have an effect on the sector's overall growth.

What is Proptech?

Proptech, or property technology, aims to make it easier to buy, maintain, manage, and invest in real estate. It is employed for a variety of purposes, such as real estate listing and rental services, Mortgage Technology in housing, online markets, modelling for virtual and augmented reality, Internet of Things (IoT) home appliances, and property management software.

Proptech, now a $18 billion industry, has not expanded nearly as swiftly as financial technology, or fintech, and fewer new businesses are being formed in this sector. Possible causes for this include a misalignment of the business units within large property companies, obsolete latent infrastructure within these organisations, and concerns about declining revenues should end-users gain excessive control. Other potential causes include a disconnect between the problems being addressed by innovators and those faced by real estate agents.

Proptech Market:

The property market's craze has further aggravated the housing crisis in the US. The recent out-of-control inflation has increased asking rents for residences as well as home sale prices.

The average monthly asking rent in the US is expected to rise by over 15.2% in 2022, according to online real estate brokerage business Redfin, with the greatest rises occurring in Portland, Oregon (39%), and Austin, Texas (35%). Apartment List, an online rental business, is even more negative, expecting a YoY increase of 16.3% in April 2021. The fact that there has been an increase of 0.9% month over month in the first 4 months of 2022 is even more concerning.

However, even would-be homeowners are having an extremely difficult time finding a home. Low mortgage rates, a dearth of housing supply, and the entry of 46.8 million millennials into the housing market have all contributed to the imbalanced demand for homes that has resulted in this price spike.

In reaction, in order to help stabilise the market, the Federal Reserve raised interest rates, which increased the cost of borrowing. By the end of the year, they may even increase interest rates by 2.5%, according to their indications.

However, if these policies have any impact at all, it will take a while. A significant portion of the US population no longer has access to housing due to rising rents and home prices as well as stagnating salaries.

Fortunately, some significant businesses in the proptech sector are coming forward to help solve the housing problem. For instance, Ice Mortgage Technology in housing employs intelligent automation and a large dataset to speed up and improve the efficiency of residential mortgage lending. They have an extensive platform that allows lenders to originate more loans while automatically ensuring compliance. This lowers the processing fees for loans, which can then be passed on to the borrower.

List of the few Proptech business:

• Rocket Mortgage: Rocket Mortgage works directly with borrowers, expediting the process using their app and ensuring that homebuyers have a financing strategy in place before they set out to buy a property. This increases the bargaining power of potential buyers, which may help to balance out the current power imbalance that favours sellers. In order to give at-risk and low-income communities a fair chance at homeownership, Rocket Mortgage also works with these communities.

• Redfin: Redfin serves as a national real estate broker, facilitating communication between individual homebuyers and sellers on their website. Because of economies of scale, they are able to offer far lower commission costs than a typical real estate agent. This aids in lowering transaction fees, which are typically a highly intimidating initial barrier to house ownership.

• Apartment List: Renters can find rental listings on Apartment List, and landlords can manage their rental properties. By having control over both sides of the rental market, they are able to reduce expenses for both tenants and landlords, helping both parties. In order to create an informational imbalance between tenants and landlords, they also conduct extensive study on the most recent developments in important real estate rental marketplaces. There is an urgent need for short-term remedies that assist to alleviate some of the symptoms while these policies play out over the long term. The current housing crisis requires considerable policy measures aimed at expanding supply and regulating demand. The rising use of technology and creative solutions in the real estate industry, as discussed below, can greatly aid in managing some of the problems that are frequently encountered in the housing market.

Conclusion: Real estate developers, brokers, and agents can maximise their efforts without expending a lot of resources with the aid of a dynamic PropTech ecosystem. In reality, online channels can now be used for pre-sales procedures, lead management, product showcasing, and unit reservations.