Artificial Intelligence
AI Enables Personalized Property Intelligence for Investors
By Steve Gaenzler
Historic inflation, a doubling of mortgage rates, and general uncertainty about the direction of the real estate market have made investors cautious about the future and concerned about risk in their portfolios.
The U.S. housing market is experiencing something between a normalization and a correction. After skyrocketing in 2021 and early 2022, home price growth slowed significantly between June and September, according to homegenius Home Price Index (HPI) data released by homegenius Real Estate. But while the slowdown has been broad based, it has not been evenly distributed. Shifts in home prices vary significantly by market—with the West and Southwest seeing the biggest slowdowns in appreciation and San Francisco becoming the first major metro to register falling home prices.
Geographic differences make accurate valuations a challenge at a pivotal moment when investors need maximum clarity. Fortunately, artificial intelligence (AI) can help solve the trickiest puzzles. Recent AI innovations in valuation technology now make it possible to generate highly personalized intelligence on properties and gain an analytical edge in fast-moving markets.
Introducing Computer Vision
Computer vision is a field of artificial intelligence that uses advanced machine learning to teach computers to interpret and understand the visual world. This technology has already been used for many things like autonomous vehicles, facial recognition, and medical image analysis. Computer vision is being applied to more and more use cases across different industries every day, including the real estate valuation process.
By drawing on billions of digital images from cameras and videos and processing them through deep learning models, computers can be taught to accurately identify and classify the attributes and condition of a property and evaluate it against comparables in any geographic area. This type of AI attempts to mimic the abilities of an appraiser to see a property and assess its value, except AI can be faster, smarter, and may mitigate inherent human bias.
Computer vision technology and AI-enabled pricing tools have a range of applications across the real estate ecosystem. For investors, it may help fine-tune investment strategies, increase return on investment (ROI) for portfolios, and make investment decisions based on personalized property intelligence:
- Acquisition Opportunities – For well capitalized investors ready to take advantage of opportunities in the market, the ability to act quickly is an advantage. Intelligent search functionality powered by AI allows you to create a personalized “buy box” to quickly sort through available investments and make decisions. You can also get more accurate estimates of the property value after improvements are made, to quickly establish potential ROI.
- More Accurate Property Valuation – Valuation tools embedded with computer vision can make it easier to value a larger portfolio of properties quickly by looking at the interior and exterior condition of a home, objects and features that impact value, and other factors to deliver an accurate valuation without the need for a site visit.
- Augmented Valuation – Property owners can upload updated photos of properties that have undergone renovation to capture improvements that have been made since the last time a property was listed. Computer vision tools can then generate an updated valuation based on the current condition.
- Portfolio Insight – Topography and satellite imagery combined with computer vision AI illuminate details about a neighborhood or local market in an automated way. Evaluating images through time helps investors track changes in markets to help them determine when to deploy an expansion, entry, or even an exit strategy.
- Property Maintenance –It can be difficult to know which properties need maintenance or renovation without seeing them in person. Some properties may have been subjected to more wear and tear than others, and as market conditions change over time some other properties may have shifted in value. Computer vision makes it possible not only to see each of your properties but also compare their condition to others in the same market with similar characteristics.
- Divergent Market Performance – Using a Home Price Index (HPI) powered by AI can help you make sense of divergent market performance and understand the dynamics of different geographies. As home prices fall in some areas and continue to rise in others, an HPI that allows you to view micro-markets can provide valuable insight for your acquisition and disposition strategies.
These applications work together for real estate investors and may help to mitigate risk, increase accuracy, and speed up the analytical process. As the U.S. real estate market enters a period of uncertainty and turbulence, technologies that deliver personalized property intelligence at a macro and micro level will be increasingly valuable. Intelligent valuation solutions powered by AI image recognition and computer vision technology like homegeniusIQ from homegenius Real Estate are transforming the real estate industry and making it easier for investors to navigate the challenging market. It is all about getting the right data in hand at the right time so you have the ability to maximize the value of your portfolio and maintain a stable risk management posture.
Whether deteriorating economic conditions in the near-term will be enough to overtake the underlying longer-term secular trends driving the run-up remains to be seen. But while they are waiting for a clear trend to emerge, now is a good time for investors to take stock of their portfolios and make decisions based on the most accurate analytics available.
