Artificial Intelligence in Real Estate
Artificial intelligence (AI) is rapidly changing the way businesses operate across industries, and the real estate market is no exception. The integration of AI in the real estate market has been revolutionary, helping to streamline processes and provide better customer experiences. In this post, we will explore the top 3 ways AI is changing the real estate market.
Improved Property Valuations
One of the biggest challenges in the real estate market is determining the value of a property accurately. The traditional approach to valuing properties involves manual processes that can be time-consuming and prone to human error. However, AI algorithms can analyze data from various sources, such as previous sales prices, current market trends, property location, and other relevant factors to aid in property valuation.
This technology is still a work in progress and largely based off analyzing data and hard facts about your property (size, bedrooms, bathrooms, year built etc), and excludes property condition, interior upgrades finishes, and other unknown facts which alter value. Pretty soon, AI just may be able to use photos of your home online to analyze the interior finishes, identify materials, locate damage, and provide a more fine-tuned valuation taking in to account the interior design and finishes of the home.
Personalized Property Recommendations
AI algorithms can analyze buyer preferences, search history, and other data points to provide personalized property recommendations. This means that potential buyers can receive tailored recommendations based on their unique preferences and needs. These recommendations can include properties that match the buyer’s desired location, size, and amenities and more.
Personalized property recommendations can help buyers save time in their property search and provide a more engaging and personalized experience. They can also help real estate agents to better understand their client’s needs and provide more targeted recommendations.
AI-powered predictive analytics tools can help buyers make more informed decisions. By analyzing market trends, pricing data, and other relevant information, AI can provide insights into the potential value of a property, the likelihood of it selling quickly, and even predict which homes may be put up for sale in the future. This can help buyers, and agents, make more informed decisions about properties.
AI can analyze market trends to identify patterns and predict future outcomes. By analyzing data from various sources, including online listings, social media, and other real estate databases, predictive analytics tools can identify changes in buyer behavior, shifts in supply and demand, and other market trends that may affect the real estate market.
AI is has also been proven helpful for real estate agents to streamline tasks such as writing incredible descriptive and empowering listing descriptions for properties. It’s also surprisingly good at writing articles, like the one you just finished reading.
The media has been full of stories for the last six months about the shortage of home buyers. They have devoted very little coverage to the shortage of home sellers over the same period, which is in fact far more extreme and is having a bigger effect on the market.
A 6 month long steady decline of available homes for sale is continuing, and we are sitting around 12,000 homes for sale down from 21,000 in November 2021. This is not as dramatic to the extent of the 5,000-7000 record lows we saw in 2021, but still a far cry from the 25,000 we consider “normal”.
This low supply continues to push home prices higher, but not at the extreme rates that we’ve witnessed in more recent years. So far in May we are averaging $287/sq ft, up from $281/ft in April, logging the 5th month in a row with an increase. With no predictable source of additional inventory expected to come to the market, this trend will likely continue in the foreseeable future.
While mortgage interest rates remain in the 6’s, opportunities for below market interest rates are available from many new home builders, which is why that market segment is performing so well. Buyers are buying brand new homes for a lower payment than a comparable older home. There are still quite a few opportunities to obtain below market financing on previously owned homes as well, with buydown programs or seller concessions. There are even lenders who will include a future refinance of your loan for free when interest rates subside, which can be a great program to take advantage of.
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