Real Estate Industry Trends In 2024: Five Predictions

Forbes February 28, 2024

Buyer

Real Estate Industry Trends In 2024: Five Predictions

Real estate is an industry known for having ups and downs—every year brings changes. Individual real estate professionals and firms must closely monitor these changes so they can adjust their strategies accordingly and continue to bring in business.

As we head further into 2024, I expect to see five trends unfold.

 
1. Traditional Real Estate Companies Will Come Out On Top

Examine the market, and you’ll see numerous proptech companies catering to various use cases, including enabling sellers to list their homes on their own and people to invest in shares of rental properties. The proptech industry is growing and is playing a significant role in real estate. However, I view proptech solutions as supplementary tools that traditional real estate companies can benefit from in certain situations—not true disrupters to traditional real estate companies.

In 2024, I predict that traditional real estate companies will come out on top, especially as more start adopting technology that streamlines their processes. Why? Because real estate, in large part, revolves around emotions. Working with a local agent who knows the area and can empathize with their clients is, in my view, invaluable, and most clients will want those benefits.

 
2. More Real Estate Professionals And Companies Will Leverage Technology

From my observations, some real estate professionals and companies have been slower to embrace technology. However, given that it’s arguably becoming more important than ever to do so, I expect more to begin leveraging technology this year, especially given the rise of artificial intelligence.

Consider a 2021 report by the National Association of Realtors Research Group, which found multiple listing software and electronic contract and forms software to be popular among members surveyed, with three-fifths and two-fifths of members, respectively, using these tools daily. The report also looked into real estate firms’ software usage and found that the tools “firms most often provide or encourage are e-signature, comparative market analysis, electronic contracts/forms, and multiple listing.” For instance, 86% of the residential firms surveyed indicated that they use e-signature.

What’s more, even property inspections can now be done via smartphone apps. Real estate professionals and companies that leverage technology will be able to make life easier for their clients—and in turn, those clients will be more likely to send along referrals.

 
3. There Will Be An Eventual Increase In Consolidation

High interest rates cool down M&A activity. According to an analysis published in January 2024 by PwC, “global real estate transaction volumes and values declined by more than 40% during the first nine months of 2023 compared to the same period the prior year as dealmakers struggled with rising interest rates, financing challenges and many other headwinds.” But as PwC noted, it expects that “recent progress on inflation and the likely reduction in interest rates globally” will “boost investor confidence and consequently lead to a revival in real estate transaction activity in 2024.”

I agree with PwC’s analysis. The real estate industry's appetite for M&A activity will increase in 2024. I wouldn’t be surprised if we see real estate companies acquired by larger players and interesting M&A deals between proptech companies—and possibly between proptech companies and more traditional industry stakeholders.

 
4. NFTs And Tokenization Will Gain A Stronger Foothold In Real Estate

Currently, investing in real estate via syndication is a complicated process. But NFTs can tokenize real estate investments and make it easier for smaller investors to pursue syndication opportunities. As The Motley Fool explains, NFTs are “unique digital titles (tokens) to property, either real or virtual, that are stored on a blockchain ledger,” and there are two types of tokenization in real estate. Fractional ownership (FO) tokenization, the publication continued, is “similar to a crowdfunding platform or other similar structure that allows investors to buy shares,” and entire asset (EA) tokenization is only viable if the “actual property deed is turned into an NFT,” which is currently not an easy task due to regulations.

For instance, with FO tokenization, a company can create one million tokens to represent the assets under its management. Then, investors can buy NFTs representing the share of the assets they want. NFTs represent membership to exclusive clubs. I don’t expect NFTs to become the main avenue of investing in real estate, but I do foresee many real estate investors wanting to expand their portfolios in this manner in 2024.

 
5. Shifts In How Agents Representing Buyers Will Get Their Commissions

In 2023, according to the New York Times, a federal jury ruled that the “National Association of Realtors and several large brokerages had conspired to artificially inflate the commissions paid to real estate agents” and ordered the organizations to “pay damages of nearly $1.8 billion.” Essentially, as USA Today noted, people selling their homes had to pay commissions to their agents and the buyers’ agents.

The legal difficulties are continuing, with more lawsuits filed in January 2024. In light of these developments, we might see changes in how agents representing buyers are compensated come commission time. Perhaps buyers will have to start paying their agents’ commissions directly, or sellers will have to pay part of the closing costs as an incentive to buyers.

 
For Real Estate Stakeholders, Staying Up-To-Date On Industry Developments Will Be Crucial

As is the case in any year, it will be vital for real estate stakeholders to stay up-to-date on industry developments. The professionals and firms that will do the best business-wise will be the ones who closely monitor industry trends and take swift action.


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