The hype around virtual reality, which studies show will soon surpass that of computer gaming, continues. Companies in the sector —both new and more established —are turning to other real estate markets for inspiration.
Just last month, Metropolitan Investment Analytics released the results of a nationwide survey of real estate brokers and owners about VR’s impact on real estate markets. There’s wide consensus that virtual reality has an enormous impact in the tech sector, but the consumer market has been slow to adopt. However, new data released last week by the Metaverse Real Estate Real Estate Academy (MRREA) suggests that VR is finally starting to catch on.
While 37 percent of survey respondents said they knew or expected to soon have clients in their office using VR technology, only 12 percent of brokers have sold or leased property in a virtual reality (VR) scenario — and with good reason. Before embarking on a VR trip, real estate professionals need to decide how the technology will affect their business — and, in turn, their clients’ real estate experience.
Many real estate companies are moving ahead with VR to capture new customers, according to the survey. But the shift may not be in good business sense. In fact, it’s pushing consumers and brokers into an already crowded market with high price tags.
How far can VR go?
Once a new technology is applied to the market, rates can go up. “The higher the level of adoption, the higher the costs will go,” says Susan Spalka, founder of Monarch Research Partners, a research and consulting firm.
Spalka thinks that VR may be useful for seeing a property more closely and quickly, but doesn’t foresee VR as an economic driver in the near future. “I don’t see the VR market really taking off just yet,” she says.
In other words, while certain businesses in an industry may see a return from using VR technology, consumers may end up paying more to gain the same viewing experience.
Real estate brokers already face high price tags on their services, so Oculus Rift could be a hard sell for many. “I imagine it will be a niche,” says Dan Nien, co-founder of VR Real Estate. “There will be people who use VR for trade shows or business conferences, but not for regular consumers,” he says.
Could VR be disruptive to the real estate industry?
If consumers have to shell out a premium for VR during big events like trade shows, that could lead to a cooling in real estate in general. This could in turn delay some projects and add to the downside of the VR trend, which could drive up the price of real estate. However, the category as a whole doesn’t have very high prices to begin with, and as Vuzix, makers of virtual reality wearables, noted last year, VR could help people communicate and collaborate more efficiently.
While Nien sees VR changing the industry to a great extent, Spalka notes that the technology is only one of several available. “The value for the consumer is the interaction with others, with the real estate professionals,” she says. “It’s that interpersonal element.”
Spalka sees this kind of interaction as the future of the online real estate market, in which people will use social media tools to find listings, view listings and also interact with agents. “What they’re getting there is a better experience and a better end point,” she says.
This article was written by the Washington Post’s Business Desk and was originally published on On the Market.