2022 marked a breakthrough year for artificial intelligence. Early in the year, image generation models like DALL-E, MidJourney, and StableDiffusion were introduced and received a lot of attention. Near the end of the year, ChatGPT became extremely popular.
According to CB Insights, $49 billion in venture capital was invested in AI in 2022, 40% more than the previous year, riding the wave of excitement created by these technological advancements.
However, there hasn’t been much discussion about how AI will become more prevalent in real estate, an asset class worth more than $50 trillion and one of the major forces behind the world economy. We think this offers real estate tech entrepreneurs a sizable opportunity.
The emergence of AI will disrupt many practical real estate technology use cases, including mortgages, construction, and sustainability.
Notably, some of the most valuable businesses in the early real estate technology cycle have significantly increased value in the subsectors listed below. Future AI systems will take into account all of that.
Search and listings for homes
Because of Bing’s integration with ChatGPT, Google’s Search product may face its first serious threat.
In spite of this, neither Search nor Bing are designed for real estate, which contributes to the success of Zillow, Redfin, and StreetEasy. An ML-enabled search and listings engine with large language models, MLS integration, and more comprehensive results for buyers and renters has a huge opportunity.
Brokerages for real estate
We think brokers’ advice will always be valuable in the real estate industry. When an individual or family is making the biggest financial decision of their lives, they are irreplaceable and cannot be replaced.
However, a lot of the services offered by brokers and brokerages can be automated in a similar consultative and personalized way. Real estate brokerages’ AI-powered chatbots have a lot of potential to disrupt this industry.
Markets for mortgages and underwriting
In the United States alone, the single-family mortgage market is thought to be worth more than $13 trillion.
Although mortgage search and underwriting have improved over time, there is still room for improvement. One reason the sector stands out is the glaring lack of personalization.
AI can create and use an infinite number of customer personas, resulting in more effective search and underwriting solutions.
Insurance for renters and homeowners
Renters and buyers are typically required to obtain an insurance policy before moving in by landlords and mortgage lenders.
We think AI can fully automate the insurance layer, especially when it comes to renters’ and homeowners’ insurance policies, unlike real estate brokerages where the agent’s role is crucial.
These products are relatively less expensive and complicated, and ML-tooled bots can streamline the customer experience from policy acquisition and underwriting to claims management.