How AI Will Enter The Real Estate Market And Accurately Predict Future Property Appreciation Values

Dated: 02/03/2020

Views: 171

Technology continues to disrupt the residential real estate industry at a rapid pace. In 2020, it’s becoming more and more necessary for brokers to utilize technology and artificial intelligence to ensure the success of their business and to give themselves an edge against the rest of the competition.

In fact, clients nowadays expect it.

One of the ways technology is disrupting the residential real estate space is the availability of real-time, user-generated data that can be utilized to more accurately predict future appreciation. Predicting appreciation has always been a guessing game based on gut feeling and local knowledge, alongside Census data and quarterly reports with projected population increases in an area, job growth increases and projected rent growth increases.

This method of predicting appreciation is severely flawed for a number of reasons. First, this data is updated very infrequently. Second, it’s not granular—knowing Los Angeles is going to appreciate in the next year isn’t very useful information. Third, everyone gets access to this data at the same time from the same reports, so there’s zero competitive advantage.

The better way to predict appreciation with much higher accuracy and granularity is by using AI combined with readily available real-time data. Lofty AI is an example of a company that’s doing this.

For example, you can identify rising income levels in a neighborhood by tracking the wait times for luxury ride-sharing services. If the wait times for the more expensive ride-sharing options are decreasing in a neighborhood over the past six months, that’s an indication that a wealthier population of people are moving into that neighborhood. You can identify, in real-time, if there is an increase of a higher educated, more tech-forward millennial demographic moving into the neighborhood by tracking an increase in the number of properties using high-speed internet in a neighborhood, alongside data from job boards such as more job postings for software engineers or social media managers—two high-paying jobs sought after by millennials-a-plenty.

You can utilize social media data and track an increase in positive tweets about a new coffee shop, brewery or juice bar in a neighborhood and cross-reference that with popular Instagram influencers posting about those same shops more frequently. That’s a precursor for increased foot traffic, which is a precursor to future property appreciation.

You might mine Airbnb data and notice that a neighborhood’s nightly rates have risen 20 percent in the last six months with a 15 percent increase of five-star reviews. That tells you that people are willing to spend more money to stay in an Airbnb in a neighborhood and when they do, they enjoy themselves because they’re leaving positive reviews. These are all leading indicators available before rent growth and new development in a neighborhood even begins. This gives people the opportunity to buy a property in a micro-neighborhood that’s primed for rapid appreciation before the rest of the industry has a clue.

You can even track an increase of social media posts of certain dog breeds in an area on to quantify a changing social mix. More French bulldog posts equal wealthier population of people in that neighborhood.


Source: RISMedia.com. Written by the experts at Lofty AI

Blog author image

Brian McCarthy

Brian is a real estate sales professional with a passion for providing excellent customer service, speedy communication and upholding the highest standard of professionalism. Catering to specialized n....

Latest Blog Posts

Now Is The Time If You Are Considering Selling

The housing market has started off much stronger this year than it did last year. Lower mortgage interest rates have been a driving factor in that change. The average 30-year rate in 2019,

Read More

How To Best Navigate New Color Trends

Bold, saturated colors are back after years of calm beiges, soothing grays, and varied whites dominating the interior design scene. What’s a homeowner to do?For years, homeowners and their real

Read More

6 Metrics You Must Know To Identify Great Investments

biggerpockets.com/Billionaire Andrew Carnegie famously said that 90 percent of millionaires got their wealth by investing in real estate.While this is true historically, we seem to have reached a

Read More

How AI Will Enter The Real Estate Market And Accurately Predict Future Property Appreciation Values

Technology continues to disrupt the residential real estate industry at a rapid pace. In 2020, it’s becoming more and more necessary for brokers to utilize technology and artificial intelligence

Read More