Technological innovation is disrupting the residential real estate sector as investors and innovative companies seek to address all parts of the homebuying value chain and improve the experience of both real estate agents and consumers.

Key takeaways:

  • Influential macro trends—including disruption caused by the COVID-19 pandemic and the differing needs of consumers across generations—have led the residential real estate industry through a wave of technological innovation across all constituents of the ecosystem, from buyers and sellers to appraisers, lenders, closing attorneys, and loan maintenance providers.
  • The U.S. real estate market has always been fragmented and focused on local and regional solutions rather than a broader, national approach. For both buyers and sellers, this contributes to the fact that too much time and effort are spent on the process, a major source of complaints and costly inefficiencies.
  • The PropTech sector features many point solutions addressing disparate parts of the residential real estate value chain. Looking ahead, outsized value will be driven by combining disparate platforms into one cohesive customer experience.
  • When evaluating where capital will likely flow in the PropTech sector, we identify two major emerging trends: (1) real estate agents requiring better leads and supporting technologies; (2) the major need for a broader consumer experience with a streamlined, all-in-one platform.
  • Given the recent investment activity of venture capital and private equity firms in the PropTech sector, we expect a flurry of deal activity between 2023–2025 as financial sponsors seek follow-on financings, mergers, and exits.