Sid Sarasvati was director of engineering at the real estate brokerage Compass when he noticed a rampant problem: the “imagination gap.”

“The problem I kept seeing was: Buyer walks into a dated kitchen, can’t see past the oak cabinets, agent loses the deal,” he says.

To close the gap, he built Renovate AI: an artificial intelligence platform that takes sad listing photos and spits out fully staged, renovated versions complete with a cost breakdown so that “you’re not just dreaming, you’re budgeting,” says Sarasvati.

Launched in 2023, Renovate AI now adds 70,000 new users a month—and it’s just one of a wave of AI tools transforming homes in seconds. The catch? They’ve opened up a whole new can of problems.

Dazzled…or duped?

“The clear win is cost and speed,” says Sacramento, CA-based real estate investor Pratik Pathapati, who uses AI tools to jazz up photos of his flips. “Physical staging can run $3,000 to $6,000 and take days to pull off, while AI delivers the same look for under $100 in minutes.”

But he’s also seen the downside: “Some buyers feel duped when they tour a bare house that looked fully furnished online.”

To be fair, real estate photos have never been entirely realistic. Wide-angle lenses have long made shoebox rooms look spacious, while flash lighting can make interiors appear brighter than they really are. Still, there’s a difference between flattering and fabricating—and once buyers feel deceived, the deal is usually dead.

AI-altered photos have spawned a new term: housefishing, using deliberately doctored listing photos designed to reel in buyers. California has responded with a law requiring disclosure of digital alterations, and other states could follow suit.

Bottom line: AI is a tool for vision, not deception. Disclosing alterations is a must, and while swapping out paint colors or staging furniture is fair game since buyers can change those anyway, digitally erasing foundation cracks goes too far. To soften the transition between the listing pics and reality, include the original photos alongside the AI-enhanced ones; you could even add the cost to bring that vision to life.

“AI visualization is more honest when you pair every image with a cost estimate. You see the dream and the price,” says Sarasvati. “That’s the difference between inspiration and a business plan.”

High in California’s San Bernardino Mountains, an A-frame cabin perched above the trees beckons to buyers for $669,000. The three-bedroom, three-bath home also has a second, separate apartment with solid Airbnb potential that can cover the property’s ongoing costs. Here’s more about the listing from the owner, Tony Award–winning theater and film producer Adrian Salpeter.

Q: What’s the story behind the house? “It was built in 1964 by a NASA engineer and his wife, who cut down trees on the property to build it. I bought it 12 years ago for two reasons: a weekend escape from L.A., and a short-term rental investment. Both have delivered. It is a consistently booked Airbnb with reliable income, and a future buyer could activate the self-contained one-bedroom apartment on the lower level to unlock even more income from the property.”

Q: What are this home’s high points? “A-frames are an international architectural style you’ll see in the Alps, Lake Tahoe, everywhere. Historically, they were sometimes kit houses that everyday people could build. An A-frame is basically just a triangle with a wall of glass, so the view becomes the decor. The house is beautiful, but the view is what makes it extraordinary. The hot tub at sunset isn’t bad either!”

Q: Any challenges to owning this home? “Fire risk is always a concern in Southern California. There was a major fire in the area in 2003, but the cabin was spared. Firefighters left a drawing, which is now framed at the front door, made with ash from the fire, showing a firefighter saving a house. It’s kind of a good-luck charm, and we’ve been spared since then. Snow and weather are also factors, although the roads are maintained and plowed. An A-frame’s angled walls also create some unique storage challenges, but luckily, the home’s cabinets were custom-built to maximize space.”

Q: What advice would you give a future buyer? “Heating and cooling are important because of the glass and exposure; good window coverings and HVAC make a big difference. Certain furniture was built from trees on the property and should ideally remain. I think houses have souls. It would be wonderful if the next owner appreciates this home’s history and continues caring for it.”

Having a supermarket nearby isn’t just convenient for grabbing Parmesan Pastry Puffs when the mood strikes. In one study, analyst Aziz Sunderji matched more than 32,000 store openings to property prices over 50 years and found that homes in the same zip code as a Trader Joe’s saw their values rise about 6% faster than the national average over three years. Another study found that over five years, home prices near Trader Joe’s rose by 49%, compared with 45% for homes near Whole Foods and 58% near Aldi.

Still, grocery stores don’t actually cause price appreciation; they reflect it. These chains invest heavily in site selection, so their presence signals that an area was already trending upward. Even before a Trader Joe’s arrives, the median household income in a neighborhood hovers around $82,000 (the highest of the chains in the study) with a typical home value of $425,000.

The flip side is also worth noting: Sunderji’s study found that Walmarts tend to be built in neighborhoods with an average household income of only $49,000 and home values of $144,000. Plus, these home prices end up trailing the national average by 4% over three years. “The K-shaped economy runs through the grocery aisle,” Sunderji adds.

Got a question about real estate? Ask it here, and we’ll answer it in a future issue.

This week, we chatted with Tyler Howell of Whole Property Management, which manages rental properties in Tampa, FL.

Average home price: $369,079 (down 3.9% YoY)
Homes that sell over list price: 14.0%
Homes that sell under list price: 69.3%
Average rent: $1,968/month

The pros: “Tampa hits a rare middle ground: It gives people a lot of the Florida lifestyle without the same cost, congestion, and intensity as South Florida,” Howell explains. Even at the height of the pandemic real estate craze in 2021, Howell managed to buy a home here for just $187,000, poured $110k into a full-gut reno, and currently rents it out for about $2,000 per month.

Today, Tampa purchase prices are down, but renter demand remains strong. As a result, “Cash buyers looking for rentals are in a great spot,” Howell says. “They’ll reap the rewards of lower prices due to elevated interest rates without actually paying any interest.”

The cons: Covid sparked a wave of apartment construction, flooding the market. “Absolutely do not purchase a one- or two-bed rental unit unless you have the ability to add a third bedroom,” Howell says. That means most condos should be avoided; single-family homes are a better bet.

His advice: “Look for a three- or four-bedroom single-family home or townhome priced around 70–90% of the median,” Howell says. “Must-haves in this market are central AC (not window units or mini splits), at least two bathrooms, and in-unit laundry. With rents currently depressed by a glut of inventory, single-family home rents will almost certainly rise as the Invisible Hand sorts the market out over the next two to three years.”

Got a home or housing market you want to highlight in The Playbook? Tell us more about it here, and we’ll consider featuring it in an upcoming issue.