Technology Hasn’t Even Begun to Reshape Real Estate
As a 36-year-old father of three, I am totally comfortable with telling you I’m no fan of Snapchat.
My kids get it, they like it, and they see the appeal of putting puppy ears on their faces before they send a self-deleting message to their friends (I am not naïve; I do understand the appeal of self-deleting messages).
I do see the fun in Snapchat, for a certain audience. What I don’t understand is how a massively unprofitable app can be the hottest company in 2017—and more important, how something like Snapchat can be labeled “innovative.”
I’m not the only one.
Robert J. Gordon, an economist from Northwestern, wrote a book last year called The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. The book isn’t as boring as it sounds, and Gordon’s central argument is that the innovation that occurred during the early 20th century catapulted the American economy forward in a way not seen since.
Inventions like the automobile, indoor plumbing, safe drinking water, penicillin, and the widespread adoption of telephones and radios all happened in the first 40 years of the 20th century. When you compare Snapchat—or, taking a wider view, social media and smartphones—to being able to drink safe water and get lifesaving medication, it’s hard to argue with Gordon’s point.
Maybe Robert J. Gordon is right, and we won’t see that type of innovation again. After all, you can only invent the car or the indoor toilet once.
But I think Gordon has the wrong perspective.
Our next great wave of innovation-fueled productivity won’t necessarily come from new tools and technologies in and of themselves. The next wave will come from applying those tools to existing industries that suffer from a serious lack of innovation.
Like real estate.
And I’m not just saying that because I own a real estate brokerage.
Real estate is the largest asset class in the world. The value of the housing stock in the United States alone is $16 trillion. For most families, the vast majority of their wealth exists in their home. And as we are all well aware, the well-being of the world’s economy largely depends on a healthy housing market.
Yet in many ways, real estate remains untouched by technology. Yes, you can find the listing for your next home online. And you can get a (really) rough idea of what your home might be worth by digging around Zillow.
But that’s not as big a change as we think it is.
In his book, Gordon argues that making a phone call on a cell phone rather than making a call on a landline is not the earthshaking innovation we think it is. It’s a degree of improvement—kind of like looking at a property on Zillow, rather than viewing it in a newspaper or catalogue.
The most important innovation in the real estate industry is yet to come and will occur when technology is used to make buying or selling a home easier—right up through signing the contract—for the most important parties involved in the transaction:
The buyer and the seller.
It will occur when buyers and sellers have a range of options for how they conduct a transaction. Like financial services (the industry I began my career in), buyers and sellers will be able to use technology to conduct transactions on their own, or use the services of a Realtor® when they need or want one.
It’s easy to think of this as a small change, and one that will only really affect those (like the team at Worth Clark) who make their living from real estate.
When you introduce more transparency, fluidity, choice, and customer empowerment into a major component of an economy, it has a big impact.
When the government deregulated airlines, it didn’t just impact people who make a living from air travel. It literally opened the world to people who could never afford a plane ticket before deregulation.
Using technology to fundamentally alter real estate isn’t as impactful as inventing penicillin.
We understand that.
But it will change one of America’s (and the world’s) most important industries and sources of wealth for middle-class families for the better.
And at Worth Clark Realty, we plan on leading that change.
President & CEO
Worth Clark Realty