The U.S. housing market has been in a state of gridlock for the past few years, leaving buyers and sellers in difficult positions. Homeowners, locked into low-interest rate mortgages, are hesitant to sell their homes, while potential buyers are discouraged by high costs. As a result, transaction volumes have plummeted, creating a stagnant market. However, according to HomeLight founder and CEO Drew Uher, artificial intelligence (AI) could play a crucial role in revitalizing the real estate market by unlocking equity and enabling more movement.
A Housing Market in Crisis
Many homeowners' life circumstances typically lead them to sell their homes and move to a new one. However, due to their favorable low-interest mortgages, many feel trapped. They are reluctant to give up their financial advantage, even if selling makes sense for their personal lives. On the other hand, potential buyers face significant challenges. Housing prices remain elevated, and rising mortgage rates have made financing a new home more expensive than ever. As Uher explained, this has created a “complete bloodbath over the last two years” for professionals in the real estate industry.
“It’s a mess out there,” Uher told PYMNTS’ Karen Webster. He pointed to the fact that current transaction volumes are at their lowest point since the mid-1990s, a downturn more severe than the one experienced during the 2008 financial crisis. For buyers, the limited inventory and high prices have made homeownership increasingly difficult to achieve, leading to market stagnation and frustration on both sides.
Challenges for Both Buyers and Sellers
The gridlock is exacerbated by the fact that many homeowners need to sell their current home to afford a new one. In a typical market, an offer contingent on selling an existing home is standard practice, but today, it’s often a deal-breaker. Uher explained that options like selling and leasing back the property or temporarily moving into a rental are expensive and disruptive, leaving homeowners with limited choices.
“For homeowners stuck in this situation, who want to sell their current home and buy another home, regardless of the market, they are commonly plagued by the problem that they oftentimes need to sell their current home first to afford the new home,” Uher said. This reality has made it increasingly difficult for homeowners to upgrade or downsize, even when they are ready to move.
AI to the Rescue Real Estate: New Tools for Unlocking Equity
In the face of this gridlock, innovative solutions are emerging, and AI is at the forefront of these efforts. HomeLight’s Buy Before You Sell program, which Uher describes as an “AI-first” product, aims to streamline the traditionally complex process of buying and selling homes. By allowing homeowners to buy their new home before selling their current one, the program reduces the stress, time, and cost associated with managing two major transactions simultaneously.
The key innovation in the Buy Before You Sell program is its use of AI throughout the entire process, from home valuation to client qualification. AI enables instant decision-making by analyzing real-time market data to determine how much equity a homeowner can unlock from their current property. This technology has allowed HomeLight to expand its reach to 47 states, with AI helping mortgage lenders and loan officers offer real-time, data-backed insights to clients.
“For mortgage lenders and loan officers, this technology is integrated directly into their existing tools, such as loan origination systems and point-of-sale systems,” Uher explained. This seamless integration allows loan officers to provide immediate, accurate information on how much equity homeowners can access, enabling quicker transactions and reducing the need for lengthy valuation and underwriting processes.
AI as the Future of Real Estate
As the real estate market continues to grapple with high mortgage rates and stagnant prices, AI-driven innovations like HomeLight’s Buy Before You Sell program offer a glimmer of hope. Uher believes that AI is essential in helping homeowners navigate the challenges of buying a new home in this difficult environment. By providing instant decision-making and streamlining processes, AI reduces the friction that has contributed to the current market gridlock.
Looking ahead, Uher envisions a future where AI handles the bulk of real estate transactions, with human professionals stepping in only for the most complex cases. “The happy path is everything is handled by technology alone, and the human beings are brought in to handle very bizarre or weird cases,” he said. As AI continues to evolve and become more integrated into the real estate process, it has the potential to unlock the equity homeowners need and break the housing market out of its current standstill.
By making the home buying and selling process faster, more efficient, and less stressful, AI could help reignite movement in the U.S. housing market, benefiting both buyers and sellers while also providing new opportunities for real estate professionals.