Despite the proliferation of digital innovations transforming various sectors, the real estate market has remained largely reliant on traditional payment methods, with cash transactions dominating the landscape.
Recent data from ATTOM, a curator of real estate and property data, shows that in 2023, an average of 38% of home sales nationwide were all-cash transactions, representing about 1 in 3 single-family home and condo sales — the highest level since 2014. Furthermore, over 63% of homes flipped that same year were originally purchased with cash, indicating the extent of cash dominance even in investment transactions.
Similarly, data from the National Association of Realtors (NAR) echoes this trend, revealing that since October 2022, all-cash home buyers who did not finance their recent home purchases constituted more than one-quarter of the real estate market. And as of January 2024, all-cash buyers now comprise 32% of home sales, reaching levels not seen since June 2014.
While these statistics underscore the ongoing dominance of cash transactions in real estate, indicating the industry’s apparent hesitance around complete digital transformation, promising signs of change are emerging.
PropTech startups, harnessing the power of technology, are helping to accelerate change in real estate practices, offering innovative solutions tailored to the evolving needs of buyers, sellers and investors.
Platforms like FoxyAI, for instance, are leveraging artificial intelligence (AI)-driven computer vision, machine learning, and data science to convert property photos into actionable data, as part of efforts to revolutionize the buying, selling, planning and visualization processes in the sector.
In a recent interview with PYMNTS, FoxyAI CEO Vin Vomero acknowledged the perception that the real estate sector has historically been slower to adopt technology. However, he emphasized that industry players have rapidly embraced the potential of AI, indicating a notable shift in mindset toward technology.
“AI has been transformational across many industries, and people in the real estate world have seen that and they realize what kind of benefits AI can have within their business,” Vomero said.
The company’s clientele spans a diverse range of sectors within the real estate ecosystem, including government entities, lending institutions, property preservation firms, and insurance providers. Through its proprietary FoxyAI Model Library, accessible via an API, these clients can access comprehensive insights on property quality, condition, location and more, enabling informed decision-making at every stage of the real estate lifecycle.
“We help facilitate better information, which in turn facilitates a better selling process,” Vomero said. “So, for example, many of our customers use our condition score and quality score models to enhance their AVMs [automated valuation models], and this allows any algorithm to factor in the condition and quality of the property instantly, alongside typical property level features like location and square footage, number of bedrooms and bathrooms, which results in a more accurate valuation.”
Moreover, the onset of the COVID-19 pandemic has accelerated the adoption of digital tools and virtual platforms in real estate. As social distancing measures necessitated remote interactions, an increasing number of businesses have embraced virtual reality (VR) and augmented reality (AR) technologies, enabling prospective buyers to conveniently explore properties and finalize deals from the safety and comfort of their own homes.
In fact, according to a survey by Rocket Mortgage cited by the NAR in a post on its website, 3 out of 5 home shoppers say they would be willing to purchase a home after only a virtual tour, an indication of the growing acceptance and adoption of advanced technologies in the industry.
In conclusion, although cash transactions maintain their stronghold in the real estate market, the ongoing evolution of digital tools and innovations is gradually reshaping traditional practices. As a result, the industry stands at the brink of a transformative journey toward a more digitized and interconnected future.
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