Artificial Intelligence (AI) has been a favorite buzzword since the 1980s; however, it’s gained considerable traction in recent years thanks to software sophistication and advances in hardware. As such, technologists and industrialists alike believe the “Intelligence Revolution” is an emerging reality at the forefront of our technologically driven society.
To fully comprehend AI’s significance and why people like David Malcolm, a seasoned real estate professional in the greater San Diego area, are paying close attention, we must first answer: what is AI?
The simplest explanation for a highly complex topic is that AI replicates human intelligence. In other words, AI can interpret an enormous amount of data, learn from it, and take appropriate action without a human telling it precisely what to do. Given the limitations of the average human, AI has the potential to outperform a human counterpart in specific scenarios since it can store, process, and analyze data at an unprecedented scale. This advanced level of data analysis can discover patterns and strategic insights that a human eye may have overlooked or would take much longer to spot.
According to David Malcolm, “AI will fundamentally change everything. The nascent technology is already affecting industries around the globe, including real estate. I believe it will impact all parties that play a role in the real estate process, including entrepreneurs, developers, landlords, and homebuyers.”
Though skeptics doubt the immediate impact of this new technological wave, Malcolm’s excitement is unwavering.
“Within the next two decades, AI will serve as a tremendously useful tool for those who can properly adapt to the change, but a potential threat for those who resist it and favor traditional methods, which are at risk of stagnation,” argued Malcolm.
As a keen observer of the real estate sector for more than four decades, Malcolm has always viewed change as an opportunity. In the early 1970s, California lowered the minimum age requirements for a real estate license from 21 to 18. Malcolm, always one to take advantage of an open door, took the real estate exam in 1972 at the age of 18 and passed. Fast forward 40 years, and Malcolm holds the highest commercial real estate designation (CCIM) in the U.S., has handled sales, acquisitions, and loan negotiations of more than $4 billion, and currently serves as President of Cal West Apartments in San Diego.
“Real estate, even though it’s a multi-billion-dollar industry, is somewhat ‘old school.’ It historically has relied on tradition, relationships, and intuition, all of which have contributed to my success,” said Malcolm. “However, change is once again knocking at the door of my profession. That’s the reality, and I, for one, am enthusiastic about the numerous benefits AI is creating.”
Although it’s still “early days” for AI within the real estate sector, transformation exists in several areas.
For example, Deepblocks, a Miami-based startup, can help reduce development expenses by parsing through zoning codes. A traditional property analysis requires substantial time and human resources, but Deepblock’s automated preliminary analysis claims it can help developers save up to $40,000 per project.
Zillow, a popular real estate marketplace company, can uncover the historical performance and estimate the quality of an investment for a specific type of property or local market. The company’s proprietary home price “Zestimate” is allegedly using neural networks, a kind of machine learning encompassing an assortment of algorithms comparable to how the brain works.
“As someone who’s been in the real estate game for decades, I’ve seen it all, but I can think of several situations where a crystal ball would have been nice. AI-driven market analysis is probably the next best thing. Since AI can explore ten times the number of options in one-tenth of the time, in addition to predicting ROI, it can lead to smarter investment moves,” said Malcolm.
AI can also assist with neighborhood forecasting. Gentrification can be predicted based on what sorts of restaurants in a neighborhood are opening, the number of current rebuilds or remodels, and the ratio of single-family housing to multi-family housing. The New York-based company, Localize.city is one of the numerous information gateways providing detailed insights to help homebuyers make more informed decisions.
Despite these advancements, the interplay of human interaction and communication among the real estate agent and homebuyer or landlord and tenant is what keeps the real estate industry moving forward.
“At the end of the day, real estate is about providing places for human beings, whether it’s residential or commercial,” said Malcolm. “It’s a business that inherently requires a great level of human intelligence to do well, a quality which AI does not yet possess. However, if AI can help our company, Cal West Apartments, provide higher quality rental housing to current and prospective tenants and ultimately improve their quality of living while protecting or even improving our company’s ROI, that’s a win-win.”
About David Malcolm
David Malcolm of San Diego is an influential real estate professional, entrepreneur, and community leader with over four decades of work experience. Mr. Malcolm is an esteemed graduate of Harvard Business School’s Presidents Program, a licensed real estate agent and broker, and a Certified Commercial Investment Member (CCIM). He has run and advised multiple public and private companies and held several municipal and statewide public offices.