The U.S. housing market has faced significant gridlock in recent years, with a stagnation affecting both homeowners and potential buyers. This deadlock has resulted in homeowners feeling trapped by their advantageous mortgage rates, while prospective buyers are deterred by elevated housing costs.
Drew Uher, founder and CEO of HomeLight, discussed with PYMNTS’ Karen Webster how artificial intelligence (AI) could be the key to breaking this stalemate and facilitating real estate transactions. Uher highlighted that homeowners are increasingly reluctant to sell their properties due to the attractive low-interest rates on their current mortgages. On the other hand, high mortgage rates and persistent home prices are discouraging new buyers, contributing to a slowdown in market activity that Uher describes as unprecedented in its severity.
“The market is in disarray,” Uher noted. “Millions of homeowners are hesitant to sell due to their favorable mortgage rates, which has created a significant barrier to moving.”
The dual issues of affordability and limited options for buyers have exacerbated the market’s difficulties. Elevated home prices combined with higher financing costs have strained potential buyers, while sellers remain hesitant to list their homes in a market where the pool of qualified buyers is shrinking. This situation has created what Uher terms “a complete bloodbath” for real estate professionals.
Digital Solutions for Real Estate Challenges
The plummet in transaction volumes has placed a strain on real estate professionals, including brokers and mortgage companies, who rely on active market conditions to thrive. Despite high home values, which continue to make residential real estate a valuable asset, current market conditions are obstructing those looking to buy or sell.
HomeLight’s innovative Buy Before You Sell program is designed to address these challenges by facilitating a smoother transition between buying a new home and selling an existing one. This program allows homeowners to purchase their new home before selling their current property, thereby reducing the complexities and stresses associated with simultaneous transactions.
AI plays a crucial role in this process, as HomeLight’s program is built around an “AI-first” approach. The technology leverages AI to provide real-time assessments of how much equity a homeowner can unlock from their existing property. This approach aims to simplify traditionally lengthy and intricate real estate transactions.
Uher explained that the integration of AI into HomeLight’s product provides “instant decisioning” regarding home valuations and client qualifications. The AI technology enhances efficiency by streamlining valuations and underwriting, allowing for quicker and more informed decisions.
Integration with Mortgage Lenders
The AI-driven Buy Before You Sell program is integrated into existing mortgage lending tools, such as loan origination and point-of-sale systems. This integration enables loan officers to offer immediate, data-supported insights on the equity available for new home purchases.
Uher sees AI as pivotal in overcoming the current market challenges. “The ideal scenario is where technology manages the standard processes, and human intervention is reserved for exceptional cases,” he said.
As the real estate market continues to navigate high-rate and high-cost conditions, AI innovations are poised to play a significant role in unlocking equity and facilitating smoother transitions for homeowners and buyers alike.
