Data and Real Estate?

Forgive me if I am wrong, but when one thinks about Real Estate, one’s mind seems to easily drift to the images of a stylish, perhaps chic agent gushing about how amazing this house is, or that apartment would be, or what a great area it would be to build your dream home etc. The industry seems to be very traditional in its ways, it’s approach still very much relying on good old-fashioned networking and hard work. I understand that there will be many detractors that if they read this article, would say that there is a lot of research and reporting that is produced in real estate that was not done before. I actually agree with this, there is A LOT of reporting! We cannot deny that a retrospective, or rear-view mirror look at your business is a good thing, but at the same time one needs to remain cognisant that it leaves a lot of room for people to draw their own, subjective conclusions based on the data that they are presented with. Often times these reports lack context, and this can lead to some bizarre conclusions being drawn that might have no relevance whatsoever.

Nobody will argue that the property market has certainly cooled. Some have managed to successfully transition into and navigate there way through this slower period, mitigating many of the effects the industry is feeling today. This takes us back to the reports – having them presents an advantage, but turning these into insightful actions to combat the fizzle, now that is where the magic lies.

I am sure that many real estate professionals will question whether (big) data, or data scientists can replace wisdom that is garnered by people in the industry – they just know right? I would certainly argue that people with intimate knowledge and experience will, regardless of any algorithms or processes, still have a major role to play, but that they will become complimentary players, not solo artists that perform in front of a willing, sometimes gullible audience.

The ability to analyse and interpret, find relevant correlations and patterns (this is where real estate professionals come into play) in a lot of data that may come from multiple sources in different formats, and answer questions that have not yet been asked, is going to reinvent the game.

Below are a few areas where data is already being crunched (in some areas, but by limited players), or should be:

1. Data for home buyer or seller (clients)

Looking at and mining data from the following sources, and then presenting them with actionable results are invaluable: census information, consumer surveys, listings of homes for sale and rent, plus historical data on sold/rented properties, GIS data, traffic, financial institution data, crime statistics…the list goes on. One is then able to produce substantially more comprehensive, actionable information (insights) for consumers around property or market trends in any particular area.

*There are sites that exist today that will filter certain data sets for you, but not at the scalable level being referenced here.

2. Property Developers (Community Development)

A lot goes into planning new communities, so I need to be careful not to take anything away from those that are doing a fine job. BUT, big data introduces new ways of looking at developments and community (PSP) planning. Imagine the value in tracking data from sensors that tell us about things such as air quality, weather, traffic, energy consumption, noise levels, etc. Imagine what that data would enable planners to do in terms of creating communities that in a very real or measurable way, cater to the health and well-being of residents, their energy consumption etc. At the moment, most of the decisions that are made by home buyers in new communities are based on emotional responses to what smart marketing folk have put together to appeal to a certain profiled buyer. Going forward, purchaser decisions will be small part emotive, big part smart, data driven.

3. Real Estate Agents

Now this is a tough one, but certainly worth a mention. Data fuelled consumers may no longer heavily (if at all) rely on agents. Big statement I know, but a very valid one. How does an estate agent remain front of mind or relevant as consumers start placing more and more faith in factual, data driven information about a property or an area? Trust is a huge part of any transaction, and when one party is driven financially to make a sale, is he/she totally objective in their advice? Data is not biased in any direction, or driven by money…As pointed out earlier, a place certainly still exists for agents, the emphasis on remaining relevant in this new space will however determine their success and longevity.

When you are trying to move your business forward, compete or even just survive in a data-driven world, one needs to have the ability to produce data laden reports that bring insights to the table that lead to actionable points to take forward and apply to your operations…answering questions that have yet to be asked!