Dec. 20, 2017
Much is said about millennials not having much interest in homeownership. In reality, nothing could be further from the truth. According to new data from Apartment List, 80% of millennials do have the desire to buy their own homes. However, it’s economic factors that are delaying the process, sometimes by as long as two decades. This assumes a 20% down payment. Still, even if this is reduced by half, only 33% of millennials would be able to save that amount in five years or less.
For the millennials that are able to get out on the market and look for a home, the process will look much different for them than it looked for their parents or grandparents. One reason for this is the relatively new introduction of virtual reality (VR) technology into the real estate market.
Well-heeled millennials will demand a high quality VR experience
Real estate commissions are a 52 billion dollar industry. The ability to use VR to showcase homes, something that Sotheby’s is already doing, has major potential to cause disruption. Given that 95% of buyers use the internet to look for homes, and 51% buy homes that they have found using the internet, adding VR to the mix seems like a natural next step.
One of the reasons that Sotheby’s is already engaged in using VR as a means to show homes is that many luxury home sales are done without the buyer ever having stepped foot onto the property. This is often because these transactions are done on a global scale where in person showings simply are not feasible. Not only will millennials involved in these transactions expect this service to be made available to them, they will likely demand an increasingly higher quality experience.
Home sales done via Facebook may soon involve VR
There is speculation that the driving factor behind Facebook’s decision to buy Oculus Rift was its potential for use in the platform’s marketplace. Considering that Facebook is heavily invested in the growth of person to person sales, the idea that a real estate transaction could take place sans realtor could drive more people to consider undertaking this process with no middleman between the buyer and seller. This can have a serious impact on the amount of time it takes to buy a house.
Home and apartment rentals will also be impacted
One of the consequences of millennials’ inability to purchase homes as early as previous generations is a major uptick in the single family and apartment rental industry. While single and attached home rentals are growing at an even faster pace, apartment rentals are being changed by the use of virtual reality.
Rather than taking the time to show properties individually, rental managers can simply schedule live VR sessions where they can show properties and answer questions. Using MARK.SPACE, a blockchain-powered 3D and VR open source platform for creation and integration of spaces and objects, they can also record showings and make those available to potential renters to view online.
There will be fewer tire kickers at showings
As more potential buyers are able to use virtual reality to tour potential homes online, fewer will come to open houses or one on one viewings with real estate agents. Buyers benefit from this because they can tour homes using VR and eliminate all from consideration that aren’t appealing based on what they observe. This means less travel and expense looking at homes. Sellers and agents benefit because they don’t waste time trying to market homes to tire kickers or those who simply won’t find those homes worthy of consideration.
Millennials will embrace the use of VR before others
About 71% of millennials express very positive feelings regarding virtual reality. This isn’t surprising as they tend to be early and enthusiastic adopters of technology. While members of older generations may need some convincing that VR adds value to the real estate process, millennials will be eager to take advantage of it. As a result of this, they may start to gain an advantage simply by being able to enjoy a more streamlined process when searching for homes they can afford. Because use of VR can mean less work for real estate agents, millennials may find themselves being courted by listing agents.
VR will also impact real estate development
For years, product designers have used 3D modeling to give investors the best idea possible of what a final product might look like. VR technology means that real estate developers can do the same thing. Potential buyers and investors will be able to see a home or building as it will look when it’s completed.
More millennials are interested in homeownership than many people think. Unfortunately, economic factors are delaying the process, sometimes by decades. However, when millennials are ready to purchase a home, or even look for a rental, they will likely find that virtual reality is an important part of the process. If they embrace this, they can enjoy a home buying process that is much simpler and more convenient.