What’s utterly unremarkable is the days on market trend for US home sales in 2020. Despite COVID, its steady downward trend of more than a decade has continued unabated. The explanation is certainly multivariate, probably inconclusive, and a subject for debate for sure. Lot’s of factors are in play, like supply and demand trends, cheap financing, and virtual real estate tech, among others.
We took a look at listing photos.
Secrets in the Image Data
Rather than cracking the “why,” our goal was to simply gather data on the “what happened as a result.” Did the COVID-created sequestering change how sellers presented their homes, specifically the images they posted with their listings?
THERE ARE REMARKABLE EARLY INDICATIONS that our image intelligence reveals insights. More than 2 years and millions of images of machine learning training allows our intelligent tech to recognize not only unique architectural styles but also room types. We analyzed MLS data for California through 2020, including over 170,000 listing images, looking for patterns in seller behavior. Relationships in the data are emerging.
We can say with statistical confidence that the average seller in California posted 15% more photos. Not surprising. What’s much more interesting is the types of photos that gain prevalence. Exterior photos increased 38%. “Other” interior rooms (meaning not bedrooms, baths, kitchens, dining rooms or living rooms), increased by 33%. Hmmm.
You might draw anthropological conclusions about the sequester changing what “home” means and how to present it. The master bedroom, kitchen island, and 3.5 baths are not enough. It’s the other spaces that make life live-able when locked up that need representation. You can’t hang out in restaurants but you can hang in your yard, so buyers need to visualize “getting out” safely.
It’s too early to provide really sexy and reliable correlations linking specific rooms to market valuations or bid-ask ratios. But image intelligence reveals insights that we are only beginning to explore. The image below provides a stimulating hint. Stay tuned.
About twenty years ago automated online home valuations became accessible to everyone. The immediacy of the insights quickly became an expectation bred into the process and the value proposition hasn’t changed since. Pick a home search site, enter an address, get a market value. A branded algorithm matches location-based pricing trends with square footage. Ta da, you have a ballpark estimate, invariably eliciting responses like, “how is our home worth so little?” or, “how is that house worth so much?” and, “what do we do now?”
The statistical vagaries of existing solutions drove us to discover a way to answer these questions by re-inventing the home valuation experience. It’s called StyleExplorer. It mashes up standard valuation (size and location) with intelligent image data of all of the attributes that should contribute a home’s actual value. The new value proposition is confidence, control and guidance in understanding the optimal valuation of home, whether you are selling, renovating or buying. The new approach changes the question from “how” the valuation was calculated, to “what does it mean” and “what can we do with it.”
do the new math
It’s a simple theorem: the sum of the rooms is bigger than whole (house).
Purlin’s StyleExplorer image intelligence allows side-by-side comparison of homes’ individual assets like architectural style, rooms, backyards, and neighborhoods. For buyers it’s a unique experience analogous to crashing multiple open houses simultaneously. For sellers, when done across homes with similar market valuations, the comparison will reveal valuation gaps and opportunities. Some valuations will fall short of a home’s salient features (valuation to gain), some features will fail to look like they should (room to improve). These immediate insights are priceless to sellers and agents nurturing process. It’s truly the automated love child of the open house and the MVP (market value pricing analysis).
Imagine if you are ready for a remodel. You want to keep up with the latest designs and furnishings (and the Jones’s), or you just need some inspiration. Looking at catalogs is helpful but feels staged, if not inaccessible. What if you could look into rooms in the real world, that people live in, and see what your contemporaries have done with their homes? Imagine peeking into your neighbor’s living room, or backyard, or man cave. This tech was custom built for remodelers too.
make it a place to live, not a property to buy
Exploring what’s inside and around homes, the design touches in the photos owners have picked, taps into past or imagined experiences and makes a crude dollar value calculation for a property seem disconnected and even arbitrary. It humanizes home valuation by dimensionalizing it – it gets to what the value of a home really means in personal terms. With this unconscious shift from left brain to right the listing ceases to be a property to buy and becomes a future place to live. Traditional automated appraisal solutions ignore that with a purchase this big, and this important, beyond basic requirements the emotional value will most often prevail over rational appeals. Emotional value can compel buyers to favor one home over another, even with price disparity. Emotional response to image-based immersion, not clever language or negotiation techniques, powers buyer motivation.
take it to eleven
Without your permission, the world has a value in mind for your home. You have no control over whether it’s spot-on, a bit aggressive, or a total low-ball.
Purlin’s image intelligence gives back control, provides guidance, and perhaps most importantly endows confidence. It can illuminate misrepresentations and re-set home value conceptions, from a position of proof-based strength (pictures don’t lie, especially side-by-side). It arms users with evidence of weaknesses and strengths, what’s needed, what’s possible, and what’s truly meaningful. Sellers can feel smart and satisfied that they know clearly the value of what they are selling, glean what to showcase and how to prepare. Buyers can explore and understand (and love) the possibilities of what they can buy. Remodeler’s can learn how best to make their home better.
Our new vision for home valuation based on image intelligence forwards a fundamental belief about home valuations: they provide context not proof; the sum of the rooms, and future experiences in them, is often greater the unexamined appraisal. It allows you to take home value to eleven.
Curb appeal … status, taste or just home? Some say that architectural style of a home says something about you, like your car or your clothes. Others care more about design, and less about outward impressions. It’s not far-fetched to think that either type would love to search homes by style.
Unfortunately, the search for homes for sale by style is weak at best and impacted by considerable misinformation. In other words, you never know what Google’s gonna get you because of faulty text-based descriptions of listings. The principle source of home listing, the MLS, includes architectural style only 33% of the time. What’s more, those descriptions are wrong half of the time. When you search for Modern Homes in California you will most likely get a fraction of what’s truly available. And more than a few mislabelled Mediterranean, Victorian and Craftsman homes.
Images speak better than words
Purlin fixed this using pictures of homes instead of relying on sketchy or omitted text descriptions. As a result, home styles are identified correctly 80% of the time, or 2.5X the accuracy of existing sources.* We trained our AI with millions of images to find homes for sale using a combination of advanced computer vision and machine learning technology. Home buyers (and renters and renovators) can now do home searches by specific architectural styles. They can see what those styles look like in the actual neighborhoods they live in or are hoping to move into.
We say, “a picture is worth a thousand words, but data in an image is far more reliable.” Even a thousand words is a meager facsimile for what your eye knows, consciously or not. We created technology that allow us to skip the awkward verbal translation.
*Based on over 140,000 listings sourced from California MLS
Anyone who has dipped his or her toes into the California housing market—or glanced at any news sites—has noticed that it’s a lot more hectic than it used to be.
Not only do homebuyers have to review an overwhelming amount of available houses, but they have to review them at lightning speed if they want to snatch up the home of their dreams.
It’s important that homebuyers know which factors are contributing to this frantic housing market. After all, knowledge is power; once you understand why the home buying process is so frenzied, you’ll understand how to conquer it.
Good News At First Glance
After analyzing California’s real estate multiple listing service (MLS), our team discovered some surprising trends.
So far in 2018, more new listings have been featured in California’s housing market than any year since 2008. If you’ll remember, that was the year of the financial crisis that rocked most industries, including real estate. In that year, there were only 10% more new listings for the same period compared to this huge jump in 2018.
In fact, the number of new listings this year has increased 46% since 2013, when we saw the lowest number of new listings on the market in this time frame in a decade.
This is good news for homebuyers. With fresh listings continually popping up, they are exposed to many different styles and locations of available residences on the market.
Less Inventory, More Problems
However, that doesn’t mean there are a lot of houses for sale on the market. Even though new listings have increased drastically, inventory is low overall.
Inventory is an industry insider’s term, calculated by the number of unsold homes at the end of a month divided by the same month’s sales rate. For example, if there are 100 unsold homes at the end of January, and during January, 10 homes were sold, then a real estate expert would say that there are 10 months of inventory remaining.
Despite all the new listings on the market, there were only 3.4 months of home listings at the end of September 2018. While this is 10% higher than the amount of inventory last year, it is 17% lower than that number 2 years ago and 19% lower than 3 years ago.
Here’s where the problems come in. While there are many new listings on the market, the amount of low total inventory has created a huge demand for homes. Now, when homebuyers see a new listing they like, they make offers as quickly as possible.
From January to September 2018, houses have spent an average of 19 days on the market. This is the lowest recorded number of days on the market since 2008, though it has been steadily declining since then.
Prospective homebuyers not only have to review scores of potential homes—they have to review and act on them quickly.
Rising interest rates create another pressure on home buyers. The current 30-year home mortgage rate is around 5%, a huge increase from just earlier this year. So even if home buyers are able to get a slight reduction in price, their monthly payment could be the same or higher in a rising interest rate environment.
Don’t Depend On Discounts
Because houses are being snapped up so quickly, sellers haven’t had to indulge in as many negotiations on price. Discounts on listings are decreasing steadily.
Currently, the average home price discount (we’re calculating the “discount” as the final sales price versus the original listing price) is only 0.62%. In fact, this number has been steadily declining since 2014, just as new listings on the market have been steadily growing since 2014.
Homebuyers are having to face a time crunch and a higher price tag, too.
Finding A Home In A Seller’s Market
Even though new listings are coming out every day, low inventory has given sellers a huge advantage and thrown homebuyers into a chaotic scramble to find homes that they love.
In this seller’s market, having the ability to conduct a fast, zip-code-agnostic, real-time search aligned with your unique preferences and budget is critical. If you are forced to complete your search through typical web apps that require a mass of manual labor on your part, you simply won’t be able to act fast enough to secure a home.
Luckily, in a time when technology really is the only way to get ahead of the home buying frenzy, there are home buying intelligent assistants like me ready to help.
To help you outstrip competing homebuyers, I search multiple areas in real time, building price sensitivity into every high-score match I place in your feed. I take your preferences into account, whether they be for a neighborhood close to a top-notch school or a bungalow that caters to your commute.