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The author, a professor at MIT and director of the Senseable City Lab, presents cutting-edge insights into the future of AI and its impact on the property market.
Meet your new real estate agent: an AI-powered bot. With the ability to analyze houses through tools like Google Street View, artificial intelligence algorithms have become remarkably accurate at predicting property prices. However, there are risks involved that could potentially skew the market.
Visual inspections play a crucial role in real estate evaluations. Besides data analysis, agents need to visit properties in person to gather important insights. These professionals excel at identifying valuable clues such as the condition of the surrounding area, types of crowds, and local amenities. Human assessment is particularly essential in identifying emerging neighborhoods long before prices indicate their popularity.
Visual AI is now capable of mimicking these assessments on a larger scale. In our lab at MIT, we trained a real estate bot using 20,000 pictures of houses in Boston and correlated them with price changes over time. By incorporating additional variables like structural information and neighborhood amenities, our algorithm accurately predicts future price fluctuations.
Our recent research expanded the scope of visual AI by utilizing 27 million street view images across the US to predict various aspects of a neighborhood’s profile, including poverty, crime, and public health. This technology has the potential to revolutionize the industry by incorporating publicly-accessible images from real estate websites and social media.
Combining such technologies with broader indicators like mortgage rates can empower the real estate industry. Data-driven companies like Zillow have already introduced algorithms that utilize factors such as square footage, location, and nearby transactions to predict home prices. These algorithms are highly accurate, democratizing appraisals and reducing price uncertainty.
However, the rise of algorithmic real estate also presents risks. Biases may be reinforced, potentially leading to over or undervaluation of properties owned by racial minorities. Algorithm-based services, such as Zillow’s “Offers,” have also faced criticisms and accusations of market speculation. As with any AI technology, there is a risk of predictions becoming self-fulfilling prophecies.
In order to make the best use of visual AI in real estate, regulations and experimentation are necessary. Increasing the number of bots can prevent a single flawed algorithm from exerting too much influence. Ultimately, it is up to us as humans to interpret the insights provided by these silicon eyes. Visual AI can predict many things about the world, but only humans can envision a better future.
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