It is taking its geospatial specialty to an even more granular level
It’s increasingly appropriate – even prescient, one might say – that CAPE Analytics is based in a California town called Mountain View. Already making waves with its real estate intelligence platform, the company is now at work on further applications yielding views from various properties it surveys.
Using artificial intelligence and geospatial imagery to provide property insights, the company raised eyebrows with the sophistication of its recently launched AIRE platform. Raj Dosaj described the product as one that combines computer vision, aerial imagery, geospatial data and proprietary data sources to provide information about properties and their surroundings, with a key focus on data affecting property value and marketability.
And now, the company is taking that to an even more granular level. In a recent interview, Dosaj offered Mortgage Professional America a “sneak peek” of new features. “We’re expanding on our geospatial data,” he said during a telephone interview. “A home’s value can be dramatically impacted by the view that you have – a view of the ocean or a view of a lake, etc. So we’re releasing analytics that support measuring and determining the view from a given house. And we’re also measuring the impact of traffic on home values.”
Dosaj hinted more details would be forthcoming. The applications are something of an offshoot to the AIRE platform launched earlier this year. The platform leans on AI to provide insights but also focuses on its robust aerial photography database that comprises more than 110 million structures and property elements – think solar panels, swimming pools and the like – that would not typically be presented through use of traditional records.
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“We can tell you the exterior conditions of the house,” he previously told MPA. “We can also tell you straightforward things like does it have solar panels? Does it have a swimming pool? What kind of driveway does it have? So, we can assess conditions of the house all through imagery.”
To be sure, existing datasets – such as standard property records, public records and MLS-data – are already utilized by investors and property stakeholders, but they are not as reliable and can inadvertently omit critical information about properties. AIRE’s geospatial data enables mapping data sets to also be layered on to the platform, allowing it to incorporate a property’s proximity to geographical features, such as coastlines, streets, or train tracks, into the analysis.
It’s fast too: “So if you send an address to our platform, we return back all the property features – if it has a pool, solar panel, the condition of the roof, the condition of the yard, location factors around it if it’s next to a highway or on the coast, plus the liquidity score – all come back within a second and a half.”
The company is touting the liquidity score aspect of AIRE as a safeguard against volatile and unpredictable market forces. Low interest rates and soaring property values combined the past couple of years to yield impressive returns and low mortgage defaults. But with rates rising, the landscape is less certain, placing a premium on the ability to deploy more stringent risk measures, the company noted in its literature.
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“Home purchases and refinances may start to reduce in number as fewer buyers qualify, HELOC origination should increase, and single-family rental (SFR) investors may no longer be able to count on the strength of every rental market,” the company noted.
For all the market uncertainty, there is one immutable truth: Real estate properties are one of the most illiquid assets available. “The liquidity of an individual property is observable by looking back at the number of days that a property was listed for sale before it was sold and the price at which it was ultimately sold,” the company asserted. “The idea of liquidity has been used as a proxy for the ability to sell a property without the need for discounting the price, but the speed and price at which a property is sold can vary wildly due to its dependence on macroeconomic conditions and hyper-specific conditions at the individual property level.”
To stay ahead, investors and originators operating in this new market will need a forward-looking metric backed by AI-powered property insights, according to the firm. Enter CAPE Liquidity Score, described as a “… first-of-its-kind predictive metric” providing investors in single-family real estate and mortgages with a direct way to assess the desirability of an individual property within its local market.
CAPE Liquidity Score thus serves as a critical input into the proper understanding of a property’s valuation risk and a mortgage’s likelihood of prepayment and loss, Dosaj said. “When the market’s hot like it has been, you may not be as likely to be burned by less liquid homes because homes are moving in general,” he told MPA. “But if the market starts to correct or level off, the less liquid homes – the ones with the low liquidity scores – will feel the pain first from any kind of leveling off or market correction.”
Sure, it’s a brave new world what with AI and machine learning and all. But in current times, it’s an uncertain and unpredictable world as well.
