A Look at How Big Data is Changing the Real Estate Industry
When you look at a staple industry like real estate, it’s challenging to imagine any trend producing significant change across the board. But when you study the role of big data, it’s hard to see it as anything other than a catalytic force for positive transformation.
In Real Estate, Big Data Means Big Change
This isn’t your daddy’s real estate industry…seriously.
Traditionally, real estate was all about networking and building connections. Handshake deals were common, and it was often the individual who spent the most time sitting with bankers, landowners, developers, and other investors who had the most success. In other words, you had to be married to the game to be a highly successful figure in the real estate industry. There was no replacement for time or sweat equity.
Hard work is still a driving factor in real estate success, but to say that it’s the ingredient would be an overstatement. Big data is single-handedly changing the way real estate professionals make investments and facilitate transactions. There’s still a time and place for grinding away and building professional networks, but it’s possible that information now supersedes connections. Some would argue otherwise, but the fact that it’s even an argument indicates just how rapidly the industry is evolving.
In the early days, big data was defined as the large volume of structured and unstructured data that inundated businesses on a day-to-day basis. So-called experts described it in terms of “the three V’s:” volume, velocity, and variety. But SAS (News - Alert), unsatisfied with such a basic explanation, considers two additional dimensions: variability and complexity.
“In addition to the increasing velocities and varieties of data, data flows can be highly inconsistent with periodic peaks,” SAS explains. “Is something trending in social media? Daily, seasonal and event-triggered peak data loads can be challenging to manage. Even more so with unstructured data.”
It’s this inconsistency that often intimidates people and makes them unsure of how to approach big data – but it exists. And in addition to being variable, it’s complex.
“Today's data comes from multiple sources, which makes it difficult to link, match, cleanse and transform data across systems,” SAS continues. “However, it’s necessary to connect and correlate relationships, hierarchies and multiple data linkages or your data can quickly spiral out of control.”
In the real estate industry, there’s nothing clean or predictable about data. Variability and complexity are defining factors in this branch of big data, and you have to view it through these lenses. But once you do, you’ll start to see it for what it is: transformational.
3 Big Data Trends in the World of Real Estate
In order to understand the impact big data is having in the real estate industry, let’s take a look at a few of the major trends:
1. The Democratization of Data
Speak with Stan Humphries, chief economist at Zillow, and he’s adamant that the accessibility of data that’s now available to consumers has changed their business for the better and made it more valuable on multiple levels.
“We’ve moved from raw data to information and context, and finally to real, actionable insight,” Humphries says. “[The company aims to] create complete transparency of real-estate info. We not only want to create complete transparency but also analytics products.”
In addition to producing more informed buyers, this influx of widely available data has produced a dramatic rise in the number of people who are starting their own real estate ventures from scratch. While there are a number of factors involved, the democratization of data has played a significant role in empowering people to move.
2. Predictive Analytics on the Rise
The analytics space has evolved a lot since it first became a mainstay in the business world in the 90s. No longer is it restricted to back-office reporting and manual number crunching. The onset of predictive analytics means huge opportunities across many different industries.
“Suddenly, artificial intelligence is no longer a plot line in sci-fi movies, but a viable decision making tool for business,” says Chris Stuart, senior vice president of business development and operations for Berkshire Hathaway HomeServices. “Combine the ensuing age of AI with a justifiable obsession for big data and analytics, and business leaders must now confront the reality that when the process of analyzing analytics becomes fully automated, machines may dictate our next move.”
While it sounds a little intimidating, the truth is that predictive analytics will make the industry more intuitive and engaging. Imagine mobile search apps where homebuyers can sort listings based on hyper-specific factors like brick houses in cul-de-sacs with master bedrooms on the main floor in specific zip codes. Or picture a world where you can take a virtual reality walkthrough and remove walls, shift furniture, and swap out countertops to see what a remodel would do. It’s all becoming possible with the progression of big data and predictive analytics.
3. The Growth of CRM Software for Real Estate
In the past, CRM software hasn’t been a good fit for real estate agents. Not only does it require lots of training, but it’s also time-consuming and too complicated for the basic needs agents have. But new platforms are emerging that promise to change this – including a new platform from startup First.
“The platform tracks attributes and home-selling behavior of 214 million people in the U.S. in order to calculate its seller scores, which are automatically updated when any factors change,” real estate expert Matt Hunckler explains. “Agents can use these scores as a guide for outreach, theoretically winning more deals in less time than if they had reached out to their network at random.”
The hope is that platforms like these will save agents time and give them a better chance of connecting with the right client at the right time.
A Future Defined by Data
You can’t separate the real estate industry’s future from big data. For better or worse – though mainly better – the two are inextricably connected. Learning how to work with big data will help individuals and large firms go with the current, as opposed to fighting upstream against it.