Housing Market Woes, BOI is Back, and AI Shift by Crunchbase

Hey everybody, it’s Gene Marks, and welcome to this week's episode of the Paychex THRIVE Week in Review. This is where we take a few items from the news, and we talk a little bit about them because they impact our small businesses.

So, the first item comes from the U.S. residential real estate market, and it isn't good news at all. Sales of existing homes fell in January, although they were up a very small amount – 2% year over year – they still fell in January. In addition to that, realtor.com has reported that the active inventory of homes is up 28% year over year. This is the number of homes that are available for sale. They're not, clearly they're not selling.

The American Institute of Architects also came out this past week with their billings index. They do this every month. The AIA polls their members to ask, hey, what are you billing and what do you expect to bill? This is a leading indicator because architects obviously work on both residential and commercial properties well in advance. Well, those billings are very, very soft right now looking forward to 2025.

And then to add salt to the wounds, the National Association of Home Builders had their monthly sentiment index that reached a five-month low, mostly on concerns about potential tariffs coming in which could impact the prices of the lumber and other construction materials that these home builders are purchasing.

The members of the National Association of Home Builders said that sales expectations in the next six months are taking a major hit and are expected to be very soft, if not decline over the next six months.

So, a lot of troubles going on in the residential real estate industry, unfortunately. And this has a big impact on so many small businesses both directly and indirectly that serve that industry. So, residential real estate still struggling right now, still expected to struggle over the next few months. That is the news that is coming from that industry.

The next news has to do with the Corporate Transparency Act's Beneficial Ownership Information. Remember that? Well, guess what, it's back. Remember at the end of last year we were going to be required to file a certain information about our beneficial owners to the Treasury Department. Most businesses were eligible for this. There were plenty of exceptions, but it was estimated that 32 million small businesses would have to be making these filings.

It was part of a Homeland Security to make sure to investigate the ownership of a lot of entities of small businesses, you know, as well as shell companies, things like that. So, we had to report this information of all of our beneficial owners.

This rule was contested in court. It was stayed for a while. There was a national injunction that was in place. But now, according to CNBC, that national injunction has been overturned. It's been struck down. So, because that national injunction has been struck down, the clock is now tick all of us to file this information. The Treasury Department has given a new deadline of March 21.

If you Google the Corporate Transparency Act or beneficial owner information, you can be directed to the Treasury Department's website where you can fill out the form or you can use, you know, services from Paychex, for example, to do it for you so that it's done correctly in the right way.

The information that you need to share for you personally will be things like driver's license or passport information about the owners of your entities. And this is any entity, by the way, even if you have a lake house with your family that files a separate tax return. That entity, the beneficial owners that are listed on the tax return, you have got to file more information about them with the Treasury Department.

So, this rule is now back on, which means that you need to make sure you're filing. If you don't, you could be looking at penalties of up to $10,000 per entity. So, you need to get on it. Deadline is March 21.

Final story that I have this week comes from VentureBeat. It's an interesting story about AI. Not sure if you're aware of a service or a database – it's been around for a long time – called Crunchbase. Crunchbase has been around – it was part of the TechCrunch organization. It listed basically every startup that was out there looking for funding or potentially looking for funding that they knew about with data about that that startup. It was a great resource to find information potential startups that a lot of people, the venture community or angel investors like to use.

Well, that's going to change. According to the story in VentureBeat, Crunchbase is going to abandon its roots as a historical data provider to become an AI-powered – you ready? – prediction engine that forecasts startup funding rounds, acquisitions and company growth trajectories.

The San Francisco-based company announced last week that it will relaunch its program with AI models that can predict future business events with up to 95% accuracy, betting that artificial intelligence will fundamentally reshape how investors and companies make decisions about private markets.

“The historical data industry as we know it is dead,” said Jager McConnell, the CEO of Crunchbase, in an interview with VentureBeat. “If you are a company, a data company, and all you are dealing with is historical data, I think you're going to find that you don't get to use it as much as you were in the future.”

Instead of focusing solely on past events. Crunchbase now leverages its massive data set, including usage patterns from 80 million active users, to predict future business outcomes. The company's AI analyzes thousands of signals to forecast events around fundraising, acquisitions and growth. The company claims its fundraising projections will achieve up to a 95% precision and 99% recall in back testing, meaning it correctly identifies most companies that go on to raise funding with few false positives.

So, think of the implications of this. Instead of just having a database, you now subscribe to an AI engine that is looking at millions and millions of data points about companies that are seeking funding. That AI engine is going to be using its models and algorithms to determine those companies that are best positioned to get more funding in the future, that will grow and that will succeed.

So, if you're a venture capitalist or an investor, maybe even just a retail investor like you and me, you will soon be able to look at this database and use AI to predict which companies are going to grow and succeed, and which companies are not.

Unbelievable change and an incredible use of AI. All of that is happening this year.

You have been watching and listening to the Paychex THRIVE Week in Review. My name is Gene Marks. If you need any help or advice or tips in running your business, please subscribe to our newsletter. Go to paychex.com/thrive.

Hopefully, we'll see you next week. We'll be back with more information, particularly news that impacts your small business, and a few comments about that news. We'll see you then. Take care.

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I'm your host Gene Marks, and thanks for joining us.

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