AI is reigniting investor interest in residential proptech, with firms like Fifth Wall betting on tools that reduce transaction friction.
Inman On Tour
Inman On Tour Nashville delivers insights, networking, and strategies for agents and leaders navigating today’s market.
After several years of investor attention drifting toward commercial real estate and climate-focused technologies, venture capital is circling back to one of the most stubborn problems in the U.S. economy: the residential real estate transaction.
At Inman Connect New York last week, Brendan Wallace, CEO and Chief Investment Officer at Fifth Wall, expressed renewed conviction in housing technology. Not because the industry suddenly modernized, but because it hasn’t.
“The residential transaction is still anachronistic,” Wallace said. “It’s archaic, slow and painful. We haven’t seen the transparency and frictionlessness people envisioned a decade ago. But now you have AI, regulatory changes and new consumer expectations converging — and that makes the category exciting again.”
For Fifth Wall, one of the largest proptech investors globally, the shift marks a return to a thesis that originally drove early bets on companies like Opendoor and Hippo: Housing is the single most important consumer transaction in the U.S., yet the infrastructure supporting it remains fragmented and inefficient.
Today’s investment wave looks different, Wallace said. Instead of broad experimentation, capital is flowing toward platforms that directly compress friction, especially those built from the ground up around AI.
AI-native tools aim to elevate agents, not replace them
One example is Breezy, an AI-native platform Fifth Wall recently backed that’s designed to function as a workflow engine for agents. Unlike many CRM systems that later added AI features, Breezy was architected around autonomous intelligence from day one.
“The core value proposition is using AI to make the agent look exceptional in front of their client,” Wallace said. “Agents we’ve spoken with feel like it’s fundamentally different.”
A standout feature is Breezy’s “Underbuilt” analysis tool, which uses zoning data, geospatial modeling and setback calculations to instantly determine whether a property has unrealized development potential. The process traditionally takes weeks of manual review. Breezy compresses it into seconds.
That capability mirrors long-standing commercial real estate analysis — identifying a property’s highest and best use — but now puts that intelligence directly in agents’ hands. As municipalities increasingly adopt policies around accessory dwelling units, density changes and infill development, Wallace believes tools like this help agents speak the language of land value, not just listings.
More broadly, Fifth Wall’s residential investment lens now includes a macro housing thesis: technologies that reduce friction or cost have an outsized downstream impact.
“There’s a compelling argument that housing costs drive almost everything in the economy,” Wallace said. “So one of the filters we use is: does this technology mitigate the cost of housing over time?”
Alternative models expand — but agents remain central
At the same time, Fifth Wall is backing companies exploring parallel transaction models, including Ridley, which is building a fixed-price, automated homeselling platform aimed at sellers who prioritize cost and simplicity.
Rather than viewing these models as existential threats to agents, Wallace frames them as market expansion.
“The number of people who want to sell their homes is larger than the number who actually do,” he said. “Timing, complexity and cost keep people out of the market. Alternative models create entry points for those sellers.”
While fixed-fee or AI-driven platforms could eventually exert pressure on traditional commissions, Wallace believes the near-term effect is segmentation rather than disruption.
“There will always be consumers who want expert representation in a complex transaction,” he said. “What changes is that agents who adopt technology gain a massive advantage.”
He draws parallels with other professional services under pressure to automate. AI tools don’t eliminate expertise — they amplify practitioners who learn to wield them.
“We’re not heading toward a world without lawyers or agents,” Wallace said. “We’re heading toward a world where human professionals who embrace AI outperform those who resist it.”
Consumer finance innovation enters the ownership lifecycle
Fifth Wall is also betting on infrastructure that reshapes how consumers engage financially with housing. Bilt Rewards — widely known in multifamily for allowing renters to earn credit card rewards on rent payments — is now expanding into mortgage payments.
The logic is straightforward: Housing represents the largest recurring expense for most households, yet historically offers limited consumer upside.
“Consumers are moving enormous amounts of capital through housing every month,” Wallace said. “Rewarding that behavior creates engagement and financial flexibility.”
If mortgage-linked rewards gain traction like Bilt’s rental model, Wallace sees potential ripple effects across consumer finance ecosystems — from liquidity tools to payment timing solutions — that could reshape how homeowners experience monthly housing costs.
The renewed residential focus also follows a sharp retrenchment in climate-focused venture investing, an area Fifth Wall had aggressively pursued. Wallace described the contraction as one of the most abrupt capital pullbacks he’s seen.
“The political and cultural momentum around climate shifted very quickly,” he said. “Many hardware-heavy climate startups couldn’t survive the funding freeze.”
While Fifth Wall continues to invest selectively in energy efficiency and building technology, Wallace noted that investor attention has pivoted toward software-driven residential platforms with clearer near-term adoption pathways.
The next 24 months: Productivity acceleration
Looking ahead, Wallace expects AI to define the next phase of agent productivity. Tasks once considered routine — research, client communications, property analysis — are increasingly automatable, compressing time and amplifying output.
“Every profession involves repeatable work,” he said. “The agents who aggressively adopt these tools will have a competitive advantage that compounds.”
That bifurcation between those leaning into automation and those resisting it may shape brokerage dynamics as much as any single startup.
“The fun part is we don’t fully know where it leads,” Wallace said. “But curiosity is the most valuable skill right now.”
Email Nick Pipitone
Topics: productivity Show Comments Hide Comments Sign up for Inman’s Morning Headlines What you need to know to start your day with all the latest industry developments Sign me up By submitting your email address, you agree to receive marketing emails from Inman. Success! Thank you for subscribing to Morning Headlines. Read Next
The ICNY conversations you can't afford to miss: The Download
RealScout scores a hat trick with massive AI-led update to platform
Acquired brands are warming to Compass tech — but divided on Private Exclusives: Intel survey
How I built a custom CRM during an 18-minute Uber ride
More in Technology
How I built a custom CRM during an 18-minute Uber ride
RealScout scores a hat trick with massive AI-led update to platform
Judge denies Compass request to stop Zillow's listing policy
3 ways artificial intelligence will reshape real estate in 2026
Read next
Read Next
Agents break free: How non-NAR MLSs and associations are redefining independence
Ryan Serhant: Real estate's future is SERHANT. vs. Compass — and I'm ready to win
RealScout scores a hat trick with massive AI-led update to platform
Acquired brands are warming to Compass tech — but divided on Private Exclusives: Intel survey
