AI Valuation Forecasting Firm Bags $31M Funding, Including Backing From Penny Pritzker

HouseCanary closed the Series B funding round with backing from existing investors like Alpha Edison as well as PSP Capital, the investment firm founded by Pritzker. It takes the total funding secured by the San Francisco-based firm to $64M. Alphabet Chairman Eric Schmidt’s family office is also an investor.

HouseCanary has taken U.S. home sales data stretching back 40 years and combined this with other data relating to things like job creation, salaries and infrastructure spending to produce a model that can forecast the movement in home valuations on 4 million residential blocks across the U.S. In many instances this involved digitizing data stored in paper files or on floppy disks. The company said the model has an accuracy level of 97.5%.

The model is used by institutions like Invitation Homes, the $20B Blackstone-backed single-family rental homes business, to forecast how valuations in their portfolio will perform.

HouseCanary has also produced technology that allows lenders and appraisers to reduce the time it takes to value a home from around 25 days to less than a week.

CEO and co-founder Jeremy Sicklick said the insight the technology provides into how home valuations will move shows that in spite of the growth in prices in some markets, at present there is no systemic risk of a bubble like that of 2007.

A U.S. firm that uses machine learning to forecast home valuation movements and reduce appraisal times has raised $31M of funding, including capital from investor and former U.S. Commerce Secretary Penny Pritzker.

“We don’t see the level of risk in the system that was there in the past,” he said. “Interest rates are very low. Some of the major jobs markets like New York or San Francisco are becoming less affordable and that is meaning demand is spreading out to the secondary or tertiary markets. I would say we are mid-cycle rather than late cycle.”

On why she had invested in the business Pritzker said: “The U.S. real estate industry is poised for incredible innovation-driven transformation, as technology and data reach new segments of the market, opening up new opportunities for residential and commercial real estate alike.”

Sicklick added that considering residential real estate was the world's largest asset class with a value of around $30 trillion in the U.S. alone, until very recently decisions had not been truly driven by data.

“Even within individual ZIP codes you can see a huge divergence in returns from how different properties can perform, a delta of eight to 10 percentage points. We’re helping institutions to look at things block-by-block so they can allocate capital more intelligently.”

Further reading: This Algorithm Can Predict House Price Moves And Taught Itself About Gentrification