3 Ways Proptech Is Revolutionizing Real Estate

The real estate industry is evolving, and new technologies are helping usher in change to create better experiences for homebuyers.

By Josh Sherman | 5 minute read

New technologies are being adopted across the real estate industry, from using virtual reality to display new properties to developing new homebuilding techniques.

There isn’t one definition for the term proptech — there are many.  

A combination of the words property and technology, specific interpretations of what exactly proptech encompasses vary. It depends on whom you ask. “Proptech is defined very differently by a lot of people because real estate touches so much, and it’s adjacent to a lot of other industries,” explains Stephanie Wood, investor at Alate Partners and content lead at Proptech Collective, which she describes as “a platform that aims to bridge the information, knowledge, and diversity gap between the real estate and technology industries.”

For example, renewable-energy innovations are more likely to fall under the umbrella of proptech today, since sustainable construction has become more of a focus in the real estate business. “We look at it as technology that’s enabling the built world,” says Wood, offering her definition of proptech. Mario Facchinetti, Europe ambassador for PropTech Canada, puts another spin on it: “Proptech, by my definition, is a collective term for companies that use technology to solve problems in the real estate and construction industries.”

One thing leaders in the emerging field of proptech can agree on: it’s going to continue to transform the world of real estate. As it does, it won’t just be the industry that reaps the rewards, some experts say — homebuyers can benefit, too, they suggest. 

Here are three ways how.  

Better Buildings

Proptech is altering the way we build homes through the introduction of new materials and construction processes. “On the material side, we’ve seen a lot of innovation in terms of mixes, monitoring, and alternatives for cement and concrete — to make them more environmentally friendly — things such as self-healing concrete,” Wood notes.

In terms of processes, automation and robotics are being piloted, although widespread adoption of some groundbreaking techniques isn’t quite mainstream yet. Think technologies like 3D printing, through which robots are programmed to build walls layer by layer using concrete-like materials. More common but still cutting edge is modular housing, which involves building components in a factory, delivering them to construction sites, then rapidly piecing the parts together. These technologies have the potential to reduce construction costs by requiring less labour and they can shorten project timelines as well. 

Getting homes built faster and cheaper is a plus for builders and buyers alike. “If you have less cost overrun and it takes less time to build things, ultimately — hopefully — you can pass through some form of savings to the end consumer,” adds Wood.

More advanced materials and construction techniques can also help homebuyers save in the long run, suggests Joanna Creed, director of operations and general counsel at Venturon, a venture capital group that invests in proptech companies focused on sustainability. “From a developer side, it allows for more efficient homebuilding, and on the consumer side, the benefit is the cost savings over the life of the home,” says Creed, who also co-founded Sustainable Proptech with Venturon managing partner Deena Pantalone. (Creed is referring specifically to Panergy, a specially insulated modular-home solution in Venturon’s portfolio that can reduce energy bills by up to 15% per year.)  “Investing in that type of modular solution helps us in terms of expediting the delivery and production [of housing],” adds Pantalone, who notes modular housing has a smaller carbon footprint than traditional methods of homebuilding.

Deeper Data  

We’re living in an era of unprecedented access to information, and proptech is helping homebuyers harness that data to make better-informed decisions. “Information is control. There’s more data transparently and publicly available today than at any time in the past without gatekeepers holding onto it,” says Wahi CEO Benjy Katchen.

“However,” he cautions, “consumers often lack the ability to interpret it themselves, which is where our digital real estate platform can help.” Take Wahi’s Market Pulse tool, he notes. It empowers homebuyers to compare sold and list prices in almost 400 GTA neighbourhoods to see where home prices are more likely to be bid up. This means consumers can embark on their homebuying journeys with more realistic expectations about what they might end up paying down the road. 

A recent wave of data-driven proptech companies have been entering the realm of financing as well, Wood says. “What many are trying to do is help everyday people build wealth through real estate and educate them, since financing is an area that people aren’t as comfortable with,” she explains. The old process of working exclusively with a mortgage broker is being disrupted or at least complemented with new self-service tools for consumers. “There are ways that you can expedite this [financing and investing] process a little bit and help the end consumer get smarter earlier, whether it’s calculators that help you understand how much you can afford with new rate increases or how to figure out should you rent or should you buy right now?”

More Homebuying Options  

Proptech is helping unlock different ways for homebuyers to get into the real estate market, too. “There have been a lot more companies that have been started over the last five years — and especially since the pandemic — that are allowing people to participate in the industry, and it’s all part of the movement of trying to democratize access to real estate,” says Wood. As one such case, Wood discusses the rent-to-own model, which dates back to the ‘70s — or earlier.

While the concept of renting to own isn’t a recent innovation, emerging tech companies are breathing new life into the model. One is Toronto-based platform Requity Homes, which purchases property for renters, who enter into contracts to buy the homes for a guaranteed future price (normally within three years). During tenancy, a portion of the rent goes towards the rent-to-owner’s downpayment savings. “We basically help aspiring homebuyers who have the cash flow to afford a home but still cannot qualify for a mortgage due to various factors,” Amy Ding, founder and CEO of Requity, explains. The company’s digital platform uses tech to enable pre-approvals for program applicants and automate the underwriting process and there are plans to add new features, including the ability for tenants to create tickets online to flag property issues.

Fractionalization — which Wood describes as “breaking it (property) up into shares or units” is another way in which people can dip into the real estate market without having a massive downpayment socked away. Wood cites the U.S.-based company Fundrise, which applies the crowdfunding model to real estate, as an example.  Another is Pacaso, a stateside enterprise that lets up to eight homebuyers pool funds to purchase a property under a co-ownership arrangement. “There are a lot of different ways that people can access real estate, whether that’s for investment purposes or for ownership,” Wood adds.