D.R. Horton taps Prophetic AI to build more homes
DR Horton sign stands in front of homes under construction at the Eastridge Woods project in Cottage Grove, Minnesota.
Daniel Acker | Bloomberg | Getty Images
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Doctor HortonThe nation’s largest home construction company is using an artificial intelligence tool from Portland, Oregon-based startup Prophetic to build more homes and address the nation’s housing shortage.
Chronic underconstruction since the Great Recession has caused a housing shortage of nearly 4 million, according to analysis from several sources, including Zillow. The supply-demand imbalance has caused prices to increase by over 50% compared to pre-pandemic levels.
Homebuilders are trying to respond, but they say the cost of construction makes it difficult, along with the difficult and costly process of purchasing and developing buildable land.
“One of the biggest challenges in providing affordable housing is identifying, acquiring and entitlement of land suitable for development. We are confident that the insights Prophetic provides will help us expand homeownership opportunities for hard-working American individuals and families,” Jason Jones, DR Horton’s vice president of data analytics, said in a statement.
Prophetic has developed an AI-based platform for land acquisition and development analysis. Prophetic’s software will pull zoning guidelines from every city and county in the state for any potential parcel of land. The company said it currently operates in 25 states and is expected to operate in all 50 states by June.
“It is an incredibly large, tedious and detail-oriented process to take tens of thousands of these zoning documents and pull out the rules in a way that is not only efficient but also accurate,” said Oliver Alexander, founder and CEO of Prophetic.
Among other things, the system looks at minimum lot size and minimum or maximum density disruptions, which vary by municipality and region. It updates these quarterly.
“Then it tells you where that information is coming from, which is the key differentiator,” Alexander explained. “Once you have the section title and the page it comes from, that builds trust and then becomes ultra-efficient so you can analyze development potential in 30 seconds instead of two to three hours.”
There are just over 440,000 different ways to describe what you’re allowed to do on a piece of land in the states Prophetic analyzed, Alexander said. Developers need to sift through all of this information to see if they can build a single- or multi-family residential project on top of it.
AI’s language model-based analysis of these documents at scale can answer questions and then feed that into search AI, which Alexander calls “master unlocking” — search plus zone AI information together. At the ground level, with this AI, builders can understand what, where, and how much they can build much more quickly, making them more competitive with landowners.
“If you have that advantage in your decision-making speed, you effectively control your entire market because you’re tied up before anyone else can make a decision,” Alexander said.
