The History of The Real Estate Industry: From Pioneers to PropTech
The History of The Real Estate Industry: From Pioneers to PropTech
America; the late 1700s. In the wake of British rule, the newly formed US government is looking to exert control further into the north-west territories. In order to do so, they need to populate the rural, agricultural land. It is decided that the village of Pittsburgh, situated at the confluence of the Allegheny, Monongahela, and Ohio rivers, is the perfect place to centre efforts.
In Europe, cities were founded on the basis of an increasingly large settlement, but in America, they were built in order to attract a settlement.
To build a new city, the US government enlisted the help of wealthy businessmen who had proven their abilities by previously building property, both commercial and residential, that contributed to the growth of other cities. They did so purely as a means of investment. They weren’t in the construction or property business; they were in the money business.
Between the government and the investors, trade and industry were brought into the Pittsburgh village. By 1815, the newly christened City of Pittsburgh was an industrial centre for glass, iron, brass, and tin. The city was thriving and, thanks to the plethora of jobs available, the surrounding countryside saw an increasing amount of new settlements forming. The government had demonstrated their ability to take control.
This was the birth of the real estate industry: wealthy men building cities for the government. Before long, cities were popping up everywhere. The departure of the British had cut off all British supplies, so the demand for industry was phenomenal. The amount of work required to keep the real estate coming was far more than the businessmen could handle, and so rose the profession of real estate developer. In the 1830s, the railways arrived and America became a powerhouse.
Even in the 1800s, the words on the lips of every professional in the real estate industry were ‘location, location, location.’ The closer the land is to a transport link, the more money there was to be made. Manhattan, Chicago, Philadelphia, Boston, Pittsburgh; all built around rivers and ports.
By the late 1800s, the second biggest industry in most cities was construction. Why? Because the rules that applied to real estate development then, are the same as they are now: ‘identify a need, partner with governmental and corporate entities, and develop an effective and efficient solution to a manufacturing, warehouse, office space, and even entertainment or recreation needs.’ If you stick to these rules, there will always be demand.
So, you ask, those guys built ‘em, but who was selling them?
It is widely believed that the first ever estate brokerage was Baird & Warner, in Chicago. In 1855, they recorded their first transaction, a $5,000 mortgage loan. Their role in the real estate industry grew so rapidly, that after the city was destroyed by a fire in 1871, it was only thanks to their records of loans, mortgages and ownership of land that enabled Chicago to rebuild itself so quickly. A fascinating illustration of their history can be found here.
With the introduction of the mortgage, more and more people, including blue-collar workers, were suddenly able to secure property of their own. At this point, the residential market exploded. But there was still far more demand than there was supply, so showing and selling houses wasn’t really the ‘Realtor’s’ trade. They dealt more with mortgages and brokerage. However, as the real estate industry expanded, the gap between supply and demand got smaller and by the end of WWII, the Realtor came into his own.
America, the 1950s; nothing in the entire world can possibly go wrong. We have mastered life. property is one of the most lucrative trades around, thanks to the middle-class expanding and the suburbs sprawling further and further from the city.
The Realtor is King; arrogance, swagger, cash, girls. Each one of which is a result of the other. There’s so much property that buyers start to ‘think about it’.
‘Hmmm, it’s nice, but the garden’s a little small. We’re gonna have to think about it.’
This means competition, this means a possible alternative and that means potential failure: welcome to the ‘hard sell’.
Salesmen, in general, reached a higher gear in the fifties. Advertising was everywhere, brand knowledge was everything. The real estate industry was no different. Realtors began the experimental process of working out the best ways to persuade people that this was the house of their dreams. Around this time, the very American phenomenon of Realtors advertising their faces on park benches came into existence.
Life was good. Houses were white and grass was green. God was looking down and beaming with pride. America was untouchable, Americans were invincible. Nothing could halt the steaming locomotive that was the real estate industry.
The Tech Era
1994 saw the first publicly available property lettings on the internet. Technology had arrived and was about to change the face of the real estate industry.
With the internet, everything changed. The rules for selling property were suddenly up in the air. For a while, the industry floundered, unable to distinguish between the legitimate from the passing fad.
Finally, we found our feet and a whole world of tech began flooding into the real estate industry. Smartphone apps, digital photography, online lettings and virtual reality have all changed the way we buy our houses and rented our flats. The role of the Realtor was forced to adapt alongside it, shifting to place focus on the things that they can do and technology can’t.
Today, technology and property are finally working in harmony. Realtors are utilising all manner of tech to help sell their houses. Most recently, virtual reality and 360-degree photography are taking centre stage. The ability to experience a property without having to actually visit it is a revolution.
Who knows how we’ll be selling property in 100 years time, nor what that property will even look like, but I think it might still go a little something like this:
‘Well, Sir, the market is strong right now, and the owners are very keen to sell. Their son is having a hard time at school so they’re hoping for a fresh start on Mars…yes, the furniture can be included, but if you want to see what the space looks like empty, just flip the switch there on the side of your headset. Yes, it’s very close to hoverbus stop and only 15 minutes drive from Launchpad D…you need to think about it? Of course you do, take all the time you need, and feel free to call me anytime.’ x