[Julian Hebron is a guest columnist for Investopedia. His views and opinions do not necessarily reflect those of this site, although we did commission this article.]
I've been in lending and banking for more than 20 years, and bought my first home almost that long ago. So when the Investopedia crew asked me to explore what home buying, improving and selling looks like in the next 20 years, I jumped at the chance.
Will we get flying cars or instant homeownership first?
Let's jump in and see. But first, let's look back so we understand how you even buy, sell, or improve a home in the first place.
Home Buying and Selling 20 Years Ago
Buying my first home almost 20 years ago gives us a good example of what has and hasn't changed so far.
I was an early-career finance pro, but even I didn't get my loan pre-approved first. My (then) girlfriend and I had been saving to buy a place for awhile. We went to a party at a dope loft in Chicago's upcoming Bucktown neighborhood and decided that was the life for us. So we started wandering into weekend open houses nearby -- this was pre-Zillow. That led to finding a realtor to show us more condos. We didn't get our mortgage pre-approved until long after starting our home search.
The realtor connected us to one lender and we did two other competing lender consultations, which took a couple weeks. After we chose a lender, mortgage pre-approval took another 1-2 weeks and countless (actual, not digital) signatures, faxes, scans, emails, calls, and meetings.
When we finally got an accepted offer on a condo, it was another 40 days of work focused on property inspections, appraisals, HOA analysis, etc. Then we closed, and it was a whole new slog on moving and making improvements. Then some time later: homeowner bliss. The emotional payoff.
This is how it's gone for most whether buying the first time or selling one home to buy another.
One Stop Shop Home Ownership
Now your home search begins online. Where you start this home search is ground zero for how home buying, financing, improving, and selling will look in 20 years.
What if you could just search, find, buy (or rent), finance, improve, and sell your home all in one place? And what if you could also still shop to make sure you're getting the best deal on the loan? And what if loan approval was digitally instantaneous instead of a paper-heavy 40-day ordeal?
All of this is in progress now.
Banks, real estate companies, tech companies, and media companies will collaborate and clash as it plays out, but you'll win either way as they fight for your business. It's all about a one-stop shop for trading homes just like you do with your iPhone or your car.
Home Search and Education vs. Transacting
How does this work in real life?
You start your home-buying process on real estate search sites or education sites like Investopedia. But it's not a home-buying process to you. It's shopping and education. Let's see what some houses look like. How much do they cost? And how does buying and financing even work?
This is how we think. It's the digital version of what my (now) wife and I went through almost 20 years ago in Chicago. See some places, get some ideas, have an emotional connection. Then, get serious about doing a deal.
Home buying --- life’s biggest investment for most of us --- will still be emotion-first in 20 years. This means all the minutiae about financing, contracts, moving, and contractors is secondary to your goal of getting what you want.
The Future of Home Buying and Selling
All homeownership innovation is now centering around this emotion. Let's look at the vision from 3 perspectives:
1. Vision for Home Buying
- Pull out your phone and search for homes.
- View homes using full 3-D modeling and video so you can truly "tour" the home right on your phone.
- See every specification about the home, neighborhood, schools, restaurants, crime, taxes, etc.
- Tag the homes you like to stay organized.
- Get notified over time on sales and price changes of homes.
- Make an offer on a home by pushing a button.
- Avoid long appraisal process because the home's value is verified by data and 3-D modeling/video, and this automated valuation method is accepted by all lenders.
- Close on the home instantly because your loan is always approved via your secure blockchain wallet with realtime income, asset, debt, and credit score data. All you do is select the best lender quote and submit your always-approved profile.
- Shop, hire and schedule licensed and reviewed local movers and contractors to facilitate your move.
- Schedule moving day food delivery from recommended restaurants in your new neighborhood.
2. The Future of Home Improvement
- View 3-D imagery of your home on your phone and build your new kitchen (or other home improvement) just like you build your new car online today.
- Select and price each feature of your home improvement project as you build it.
- View and adjust line item cost of the project and the before/after views.
- See exactly how much each line item improvement impacts your home's value so you can make budget decisions.
- Shop, hire and schedule licensed and reviewed local contractors to do the work.
- Price contractor fees into total project cost.
- Close your home improvement loan instantly because the automated valuation is accepted by all lenders, and because your loan is always approved via your secure blockchain wallet (as described in #1 above).
- Schedule project start date with your newly hired contractor.
3. The Future of Home Selling
- Fill out a short form on your phone saying you'd like to sell your home.
- Receive a home purchase offer in 1-2 days, and close in as little as seven days.
- Or shop and hire a licensed and reviewed local realtor to list your home if you don't like the instant offer.
- Get asked if you're purchasing a new home, and if so, get prompted to follow the home buying steps in #1 above.
How Close Are We to This Vision?
The instant selling (or realtor connection if you don't like the instant offer you get) exists today in many markets. The instant buying does not exist today, but all the advanced search and data does exist. The instant part of buying is dependent on instant loan approvals, which require 2 things:
1. Blockchain wallets containing your always-approved loan profile (as described above). This gives you total power loan shopping because automation replaces the manual loan approval slog. You'd just submit your always-approved profile to the best-priced lender. But it'll be 5-10 years before you start to get this much control. In the next 1-3 years, lenders will use your income, asset, credit, and debt data that's "theirs" to offer this always-approved concept to you.
2. Automated home valuations (aka appraisals) that are based on realtime data and accepted by all lenders, investors, regulators, and government-sponsored mortgage backers like Fannie Mae and Freddie Mac. This enables real-time approvals of home purchase and improvement loans. We are within 1-3 years of this being broadly accepted as the data become more reliable, and 3-D modeling matures to replace the need for a physical appraisal inspection.
Accordingly, the instant home improvement loan part of the vision is getting close. As is the seamless linkage to contractors.
What's First: Flying Cars or Instant Home Ownership?
Right now, 200 companies are developing flying cars. So as cars literally start flying into the market, it's still taking 40 days to close on a home purchase, and even longer to hire a contractor and get a loan to fix up your home.
Admittedly, homeownership is more complicated than getting a ride from point A to point B. Homeownership involves banks/lenders, real estate companies, appraisers, title companies, insurers, regulators, Wall Street investors, builders, contractors, movers, tech companies, media companies, and more.
All of these groups are working on the homeownership vision laid out above, and the four best-capitalized groups are leading it: Banks/lenders, real estate companies, tech companies, and media companies.
As noted above, these companies will collaborate and clash as it plays out, but you'll win either way as they fight to give you the Instant Homeownership Experience.
And stay tuned for the next installment when we go deeper on each of the players working on this vision.