By: Victor Normand
Published: January 2016
Since the Industrial Revolution in the 19th century, all businesses and industries have been under siege by technology. In England, the Luddites attempted to stop progress by trying to get Parliament to outlaw the use of spinners and power looms in the making of cloth. That did not work and so we have all come to accept that there will always be better ways of doing things, though the pace of innovation seems lately to have us all spinning.
The term “sharing economy” understates the revolution in both technology and social norms that has affected almost the entire economy. We can trace this movement, of course, to the internet which only exists because of programs that allow all our computers to share information, communicating openly and in a common digital language. We have swiftly moved from sharing content on line to sharing our lives on Facebook and now in ever increasing ways, sharing our things, not the least of which are cars and houses.
Real estate has been affected by both the sharing of information and the sharing of physical places. The success of Airbnb has made huge inroads into the traditional lodging business by making it easy and safe for people not in the lodging business to get into the business. With sites in over 8,000 cities worldwide, Airbnb participants are offering everything from igloos to medieval castles. Although widely accepted by consumers, Airbnb lodgings have caused disruptions in some communities, particularly in tourist locations where the income from the rentals has had the effect of causing property values to rise.
The popularity of co-working spaces is another example of the acceptance that having access to space is more important than ownership. At Acton Real Estate, we have a regular periodic need for a large conference room, though not every day. So instead we share that space with other businesses in our building.
Information sharing is another opportunity often used to upend traditional business models. Real estate brokerages have long been in the sights of technology innovators who have made numerous attempts to lower costs, reduce waste and create value by offering consumers an alternative approach to the sale and purchase of real estate through expanded technologies.
Real estate consumers seem to have an endless appetite for information. With this in mind, the innovators set about gathering and organizing information and sharing it as it had never been shared before. They rightly assessed that by and large, real estate agents, not unlike others in sales, regarded information as power. In the old days, consumers were required to subject themselves to identification by logging in to websites, and as well, real estate listings were often short on details. All this was intended to make consumers seek out and deal with those “knowledgeable” real estate agents.
What these innovators failed to realize was that we live in a dynamic economic environment. Most real estate brokerages did realize that this old school model was not going to survive in a sharing economy. And they opened up and did not fight technology as Luddites might have recommended, but rather embraced the free flow of information. An added benefit of this transparency has been a higher level of trust between the real estate professional and the client.
Not every service or commodity is suitable for the sharing economy. A software engineer named Punsri Abeywickrema, who worked for LinkedIn and built platforms for the rental of everything, concluded that the most suitable category for the sharing of things should cost more than $100, but less than $500. This may also help to explain why more consumers use a Resident Expertsm now than they did ten years ago…….