The downturn in the housing market might be slowly coming to a close, suggests a new report from the Royal Bank.
It is no secret that utilizing newer
technology like big data and analytics can shake up and revolutionize nearly
any industry. The real estate industry is no exception here, and has, in fact,
already begun reaping the rewards that big data and data-driven technologies
The huge amounts of data generated by the real
estate industry can be leveraged to its advantage even further going forward as
new technology and ideas are pushing the envelope for the real estate industry
at both the macro and micro scale.
One of the most basic and powerful data-driven tools that the real estate industry has at their disposal comes in the form of analytics. The benefits of data analytics in real estate extend to both the consumers and realtors because it allows for advanced property evaluation across a huge spectrum of parameters from expected appreciation and depreciation rates to crime statistics, accessibility, and other factors. This not only allows for real estate companies to determine value more accurately and mitigate risk, but increases customer engagement as well, providing them with highly relevant information regarding potential purchases.
The huge amount of real estate data available can, and should, be leveraged for maximum predictive impact just as Wall Street uses the data available to model algorithmic trading. Through the use of data analytics, realtors and investors are able to keep up to date on vital market data in real-time, allowing for the ability to stay ahead of the curve on the rapidly changing market of commercial real estate. Accurate, timely market data can make a massive impact on a company’s ability to turn a profit on a piece of real estate and empowers potential home buyers by providing a comprehensive view of the market even as it changes minute to minute.
While these huge pools of real estate data are already being used by Artificial Intelligence programs to improve the customer experience through personalization and predictive home evaluation over time, AI can further change the real estate game. AI can help to accurately predict which locations will be the most beneficial for developers to invest in, optimizing market-level profitability and revenue and revenue as well as helping to identify optimized spatial layouts of new developments.
Though the real estate industry has been relatively slow in hopping on the big data train, it has taken a short amount of time for the industry to see the massive value that data brings to the table. Data can show investors, developers, and potential buyers detailed and pertinent information about real estate without ever having to see it in person. While macro-level data like land valuation, crime statistics, accessibility, and traffic flow are incredibly important when looking at real estate development and investing, the data generated at the micro-level is now coming into play in a big way.
Data comes in a variety of different forms, and while it can be easy to be tempted to shelf classic visual data for the more esoteric sets of data pertaining to a piece of real estate. Visual data, however, is actually at the forefront of one of the more inventive and exciting data-driven technologies being used in the real estate industry today. When enough visual data is available, realtors can implement Virtual Reality technology in order to give prospective buyers a tour of the property, giving an in-depth look at the dimensions of any given building that a static photograph simply cannot provide.
Again, VR is another new data-fueled technology that benefits both buyers and sellers of real estate. Realtors massively expand their market as they don’t have to set up actual appointments to show a home and can actually show it simultaneously to many different potential clients. Additionally, homes can be staged virtually through VR, turning an empty and visually cold, unfurnished home into a staged home in an instant with the ability to change any furniture or fixtures in the blink of an eye to appeal to any number of aesthetic palettes.
The real estate industry has been long considered generally conservative, relying on more Luddite business methods and general entrepreneurial skills to operate quite successfully for decades. This is all changing with the rise of “Proptech”, technologies that capitalize on the huge amounts of data generated in the world of real estate, which is working to help both purveyors and purchasers to make more informed decisions.
Quantifiable data, whether gathered from historical sources, social media platforms, or any other number of sources, work to show a bigger picture than many are used to seeing. When investors, realtors, and buyers are all able to see the forest for the trees, everyone comes out ahead as they have the ability to make a better decision based on all of the available data instead of just historical data or gut feelings.
In its raw form, much of the data generated by or relating to the real estate industry isn’t all that helpful. However, with the power of data analytics, machine learning tools, and Artificial Intelligence, the heavy-duty number crunching is taken care of, leaving a distilled and very useable product. In a way, these new technologies are really leveling the playing field when it comes to real estate, providing the same advantage to anyone willing to take the time to apply big data in an effective way.
These technologies are unlikely to outright upend the real estate industry anytime soon, considering the industry’s historically slow adoption of new technology. They will, however, revolutionize how properties are sold, evaluated, marketed, and even seen on a very real level.
About the Author
Avery Phillips is a freelance human based out of the beautiful
Treasure Valley. She loves all things in nature, especially humans.
Leave a comment down below or tweet her @a_taylorian with any questions or comments.
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Canadian real estate crisis needs private-sector help: CMHC
A new report by Canada Mortgage and Housing Corp. says government alone can’t solve the country’s housing affordability challenges.
The scale of the problem is so large that the private sector must be involved, says the report by CMHC deputy chief economist Aled ab Iorwerth.
The national housing agency says public solutions such as rent subsidies and more social housing are helpful, but more needs to be done.
In a June report, on housing shortages and what the CMHC called an “affordability crisis,” the agency estimated that an additional 3.5 million housing units would be required to achieve affordability by 2030.
“To address this imperative, we need more private-sector investment to build more supply in the housing market, particularly in the rental sector,” ab Iorwerth said in the report.
The report notes that government incentives can be used to make it more attractive for companies to build additional housing, particularly the rental supply in fast-growing markets including Toronto, Vancouver, Montreal, Victoria and Halifax.
Although housing affordability is most difficult for low-income Canadians, the report notes that prices are out of reach for those with higher incomes as well.
“The housing system is interconnected, so fixing Canada’s affordability challenge requires a suite of policies to affect the entire system.”
Home prices have eased this year as the real estate market has cooled, but they are coming off record levels earlier in the pandemic.
The report says the imperative of increasing housing supply will be even greater as Canada seeks to attract more immigrants.
This report by The Canadian Press was first published Nov. 28, 2022.
Certus Capital invests Rs 30 cr in EON, a prime real estate project in Mumbai
Mumbai, Nov 28 Certus Capital, an institutional real estate investment and advisory company founded by former KKR director Ashish Khandelia, has invested Rs.30 crore in EON One, a residential project located at a prime south central location in Mumbai and being developed by EON group that has 30 years of experience in Mumbai real estate. This secured debt investment opportunity will soon be available for the investors through Earnnest.me, the digital neo-financing platform of Certus Capital.
With this Rs 30 crore investment, investments through Earnnest.me have crossed Rs.100 crore within months after its launch in February 2022.
This is the third deal closed by Earnnest.me in quick succession following Rs.40-crore investment in mid-market residential project being developed by Pune-based real estate development firm Pharande Spaces and another Rs.40-crore investment in Chennai-based real estate company Arun Excello’s portfolio of four affordable housing projects.
Commenting on the investment, Ashish Khandelia, founder of Certus Capital and Earnnest.me said, “This investment in EON is a part of Certus Capital’s strategy to fund well placed projects being executed by experienced developers in Tier 1 cities. The residential real estate sector is witnessing a stronger demand revival and improved sales. At Earnnest.me, we’ll continue to offer carefully selected and diligenced investment opportunities in the real estate sector to our investors.”
The company has plans to deploy about Rs 500 crore in FY22-23 in senior secured real estate credit deal through Earnnest.me. As a part of its strategy, Certus Capital takes up 10-15 per cent of each investment to ensure its presence throughout the investment cycle.
So far, more than 200 investors with a minimum investment ticket size of Rs 10 lakh have invested in various such credit opportunities through Earnnest.me. The platform has witnessed over 50 per cent repeat investing interest. It has a diversified clutch of investors which includes real estate professionals, finance experts, family offices, CXOs, UHNI, professionals, etc. Earnnest.me continues to actively evaluate deals across Tier 1 markets including Hyderabad, Bengaluru, Pune, Mumbai and Chennai.
Certus Capital continues to grow its leadership team and has added several senior hires. The company has recently appointed former Deloitte India executive Vishal Singh bolster its institutional investment banking business. The other recent appointments include ex-Piramal Capital executive Gaurav Bhalla as Director and ex-Deloitte India executive Siddharth Pal as Senior Vice President.
Across the twin platforms, Certus Capital is working through investment and advisory deals ranging from Rs 25-1,000 crore.
Certus Capital is also planning to launch its first category-II alternative investment fund (AIF) in 2023.
Since its inception in 2018, Certus Capital has evaluated over Rs.40,000 crore of real estate credit exposure forming part of NBFCs and, housing finance companies. Certus has also advised foreign institutional investors on close to Rs 10,000 crore of closed investments / platform commitments in real estate credit and warehousing space.
Pace of real estate decline finally slowing
Prices in Cambridge, for example, are off 22%, while London and Brantford have seen an 18% decline. Kitchener-Waterloo, Kawartha Lakes and Hamilton/Burlington have all had a 17% drop in prices.
While Toronto’s decline has been 11%, prices are expected to fall further.
Toronto also saw a drop of almost half (49.3%) in numbers of home sales in October versus October 2021, while new listings were down 11.5%.
For those on the sidelines wondering when or if to buy, a Toronto mortgage expert (who prefers not to be named) has some words of wisdom.
For starters, he prefers to keep all the gloom and doom on the down-low. A correction notwithstanding, real estate remains a solid investment.
So on the plus side, “with the correction have come reduced prices and reduced closing costs, especially in the GTA,” the expert said.
That’s provided you don’t have a lot of other debt, obviously.
As for figuring out your monthly mortgage payments, calculate $6 per thousand; a $500,000 mortgage will cost $3,000 a month, for example.
The fact that a one-year mortgage is currently at the highest rate and the five-year rate is lower — an inverted yield curve — is a sign of uncertainty.
“For the first time in my career, I’m not telling people what to do. Instead, I’m telling them their options,” he said.
The consensus seems to be that the worst is behind us, “but we’re heading into stagnation. Things will level off, but we need stability.”
There’s very little on the market right now, but the expert’s expectation is that things will pick up after March break, when young families will start looking again in earnest.
“The banks aren’t taking any chances. Anyone who thinks the banks are just giving money away — no! It’s never been tougher to get credit.”
Last word: focus on your debt. “I used to say, ‘Continue to save.’
“Now I say, ‘move from investing to getting rid of debt.’”
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