For artificial intelligence, 2022 was a year of breakthroughs. Image generation models such as DALL-E, MidJourney and StableDiffusion hit the market early in the year and attracted a lot of attention, with ChatGPT going viral towards the end.
Building on the euphoria generated by these technological advancements, approximately $49 billion in venture capital was invested in AI in 2022 – 40% more than a year earlier, according to CB Insights.
Yet there has been little talk of how AI will play a growing role in real estate, a $50 trillion asset class and one of the major drivers of the global economy. We believe this presents an important opportunity for real estate technology entrepreneurs.
The rise of AI will break through material use cases in real estate technology, from search and listings to mortgages, construction and sustainability.
In particular, some of the most valuable companies in the early years of the real estate technology cycle have created significant value in the subsectors below. That will all be in play with AI in the future.
Residential Search and Classifieds
Google’s first real threat to its search product could come from Bing’s integration with ChatGPT.
That said, both Search and Bing aren’t tailored for real estate, which partially explains why Zillow, Redfin, and StreetEasy have become worthy companies. There is a great opportunity for an ML-enabled search and listing engine that leverages large language models, integrates with MLS providers, and provides more robust results for buyers and tenants.
The rise of AI will break through material use cases in proptech, from search and listings to mortgages, construction and sustainability.
Real estate agents
We believe that real estate will always need the advisory hand of real estate agents. They are invaluable and cannot be replaced when an individual or family makes the biggest financial decision of their lives.
Still, a number of brokerage and brokerage services can be automated in a similarly personalized and advisory manner. AI-powered chatbots powering real estate agents have great potential to disrupt this market.
Mortgage markets and underwriting
The single-family mortgage market is estimated to be more than $13 trillion in the United States alone.
Searching and accepting mortgages has gotten better over the years, but there is room for improvement. First, the industry is notable for its appalling lack of personalization.
AI has the ability to create and flesh out infinite customer personas, providing more robust search and insurance solutions.
Insurance for tenants and homeowners
Landlords and mortgage lenders typically require tenants/buyers to purchase an insurance policy before moving in.
Unlike real estate agents, where the role of the agent is critical, we believe that AI can fully automate the insurance layer, especially when it comes to renters’ and homeowners’ insurance policies.
These products are relatively cheaper and not as complex, and bots with ML tools can improve the customer journey from acquisition and underwriting to policy administration and claims management.