The global real estate industry is undoubtedly a giant, expected to generate as much as $4.26 trillion worth of revenue by 2025, according to recent projections by Grand View Research. However, with a market that’s growing as rapidly and largely as real estate, there’s another area of the industry that’s often overlooked: data. Data in the real estate industry is crucial for buyers, seller, brokers, investors, and every other party involved in the process to make informed decisions. Data on real estate listings, the specific locations involved, etc. all greatly influences the decision making process for all parties involved.
And yet, though data is one of the most crucial aspects of the real estate industry, the global markets still haven’t found an efficient means of properly organizing, sorting, and truly leveraging data for maximum output. There are a variety of reasons for the data shortcomings in the world of real estate, but perhaps the largest contributor is the lack of standardization in the industry and an ecosystem full of competing, limited sources of valuable data. Let’s take a look.
Limited Data Access
A major pain point for the real estate industry is gaining access to credible, well organized data. So-called “big data” is a game changer for real estate investors and professionals, but in order to truly take advantage of big data, buyers, sellers, and investors need to be able to access it. The term “big data” is used to describe the enormous amount of data that can’t be handled by a single analyst but can provide valuable information for those in the real estate industry. These are vast amounts of data sets that can be used to predict and observe market trends and enhance predictive analysis for the future of the market. However, those currently in the industry are likely aware that there are some major shortcomings.
Fingent recently illustrated many of the issues currently plaguing the real estate industry with research from Frost and Catella outlining the main challenges in the current real estate data system. According to the research, the largest factor impacting those in the real estate industry was a “lack of standardization for data and the collection methods used.” This is an issue that runs deep for many involved in real estate. While many companies pay for private real estate databases, these different databases can offer contradictory or limited information when compared to the others. The data and information from sources like Thomas Daily won’t be the same as data investors access through INREV and was likely collected in a different manner. Unfortunately, what other options do real estate professionals have?
(Full Infograhpic found here. Credit to Fingent.com).
The Case for Decentralized Data
An example of the future of sorting and accessing real estate data can be seen with ReBloc. The blockchain-based startup is working towards an improved version of the real estate data industry. Because there are so many sources of proprietary data and non-standardized practices for collecting valuable data, the company sees the weakness in the markets and is shaping a future for the industry where there is both decentralization and standardization of real estate data.
With a stated goal of “democratizing real estate data,” ReBloc is building the infrastructure and marketplace for both data providers and data purchasers to benefit from the sharing of standardized, verifiably correct data in the real estate markets. In addition, users will be rewarded for verifying real estate data and maintain the accuracy of the data transferred. With a decentralized approach to handling valuable information, there aren’t any third-parties to potentially limit or withhold data in the marketplace. Instead, we end up with a real estate data market operating in a more efficient manner.
At a time when the real estate industry is flooded with competing data providers and silos of limited information, there’s hope in the world of decentralization. Blockchain technology and distributed/decentralized networks have been taking the financial world by storm over the past year, now it’s looking to the world of real estate, specifically the data collected.
Unlike the current model that employs multiple limited centralized sources of data for buyers, sellers, and investors, a decentralized approach for data reporting and access could offer industry professionals a “big picture” account of the industry without the same proprietary limitations. With a decentralized network of real estate data, there wouldn’t be any third-party arbitrators or authorities to oversee and control data. Instead, data would be able to flow without barrier to parties interested in purchasing it. Furthermore, there would be no concern about individual databases and MLSs not being compatible together.
Blockchain technology could potentially unlock this decentralized marketplace for big data in the real estate industry. In fact, that’s why there are startups working on implementing decentralized solutions for the current bottlenecks in the industry. Ultimately, the goal of blockchain startups like ReBloc is to create a marketplace that’s not only more accessible for users, but that offers access to data that is compatible with other data. Though there are thousands of different MLSs, firms that aggregate data, and other sources of data, these individual systems are not compatible with each other and makes the process of analyzing different data sets more difficult than it ought to be. Blockchain is offering a solution.
The global real estate industry is enormous and continues to expand as emerging markets and developing regions of the world look to increased development and urbanization. With the explosive growth in the global real estate industry comes a significant amount of data, data that’s immensely valuable for investors, brokers, buyers, sellers, and the like to have access to. Given the way the industry currently handles big data, there are clearly some changes that need to be made. Switching from competing silos of information to a more unified and standardized, but decentralized, method of buying and selling data is likely to benefit everyone in the industry. From individual buyers and sellers to large property firms, access to data and the ability to buy and sell data freely is a win-win.