That’s scary.
Anthropic CEO Dario Amodei said he was “open to the idea” that Claude could become sentient, fueling fears that artificial intelligence could make white-collar jobs obsolete. The labor market is restless, and millions of Americans are praying they won’t be the next to find themselves in long-term unemployment. Additionally, the country’s involvement in the escalating conflict between Israel and Iran has led netizens to allay fears of a possible World War III with memes.
Darryl Fairweather, chief economist at Redfin, understands all these concerns, even if some of the conclusions are based more on fear than fact. But she will provide some relief to real estate agents ahead of the spring home buying season, which will hopefully set the stage for a more robust 2026.
“I think the role of the real estate agent is here to stay. A lot of the real estate agent’s job is to talk people through their feelings about real estate and manage what one spouse wants versus what the other spouse wants. In some cases, even contrasting it with what the parents who might be providing the down payment want,” Inman said. “I don’t think people would be happy talking about such issues with a chatbot.”
While AI-powered chatbots are taking over the job of providing statistics and other general market and listing data, Fairweather said they’re missing one thing: human experience. And that experience is what consumers need this spring as uncertainty impacts real estate movements.
“There is nothing comparable to an agent who physically visits homes, engages in human negotiations, and manages human experiences,” she said. “And I think the skills you get as a real estate agent can only be acquired by doing it for years. Those intangible qualities are even more important.”
The following conversation has been edited for length and clarity.
Inman: Hello, Darryl. Let’s dive in. Last week, you and one of your editors had a fun conversation at X about artificial intelligence and the labor market. The debate about this tends to be polarized: either AI will spell disaster for everyone, or it will collapse into irrelevance.
What part of the conversation do you think is driven by fear? And what part do you think is rooted in fact and should be critically discussed?
Fairweather: It’s hard to know for sure where that’s showing up in the data in real time. I base this opinion on my own use of AI and conversations with other people using AI. There is some evidence that AI is having a macroeconomic impact. So, one, it’s all data center spending. I think it’s around $50 billion. This is a very large amount of money and is currently driving GDP growth.
Without that investment, GDP growth could be much lower. Without this investment, interest rates could be lower. Because if the economy isn’t already growing through capital investment, the Fed has to lower interest rates. These capital investments may also crowd out other types of growth, debt, and investment.
When local investors decide where to invest their money, they seek the highest return on investment. In the early 2010s, the economy was in a downturn, so there weren’t many great options to put your money into. There wasn’t much of an increase in productivity. It wasn’t a great place.
That’s one of the reasons mortgage interest rates were so low. That’s because compared to other options available, US real estate seemed to be the best place to park your money. But now you can put your money away, you can lend money to AI companies, and they put that money into data center infrastructure and tell investors they’re going to get a big return on this investment.
Perhaps that’s just what they’re telling investors, and a correction is coming. Perhaps that is true and these AI data centers will be leveraged and profited.
It’s not that important for now. I think all you need to know right now is that investing in AI is very important. It requires large amounts of capital and can crowd out other types of investment, such as residential real estate.
Let’s focus on data centers for a moment. I have observed a backlash against data centers from various communities, with people concerned about energy costs and environmental impact. How do you think this movement could impact how investors view the AI sector, and how will that sentiment trickle down to the real estate market?
Yes, GROK data centers have received a lot of negative press for running on dirty fuel and spewing pollution into the surrounding area. So I think people look at that example and rightfully say, “We don’t want the solution right next door.” We don’t want data problems like this to happen to us. ”
Some of these fears may be exaggerated because they don’t really matter. Most people are on a national grid. So whether your data center is a thousand miles away or right next door, you’re using energy from that grid. So it may not be a problem even if that part is next to it.
However, the part about data centers emitting pollution is very worrying, and I think residents should raise their voices.
Yeah.
But more broadly, all these investments in AI create winners and losers. Because, as I said earlier, [AI] It means it becomes more expensive to borrow a mortgage because all your capital has been sucked out. It also consumes a lot of energy, which increases the cost of energy.
New York and Illinois are pushing to build nuclear energy, and I personally think that’s the right direction. I don’t think nuclear energy, which does not emit carbon dioxide, is sufficient.
I know there are concerns about nuclear waste, but in my opinion nuclear waste is a much better option than coal or natural gas. So in a sense, we’re accelerating our adaptation to energy, but it’s still kind of the center of the economy.
Speaking of the overall economy, I was looking through Redfin’s latest set of reports before making the call. There is more than enough anxiety. How do you expect that to affect real estate activity in the coming months? I imagine it would be difficult to sign a 30-year mortgage when you don’t know if AI will take your job or if our country is about to be thrown into war again.
I think the main reason why people feel bad about the economy is that interest rates are high. And I think there’s a connection between high interest rates and what’s happening with artificial intelligence. Because, as I said, without all this investment in artificial intelligence, the Fed probably would have lowered interest rates by now.
But these higher interest rates mean that businesses have to pay more money on their debt because there is less money left over to hire more people. They’re not hiring as much. I haven’t done much backfilling. That’s why people see it and get worried.
I think rising interest rates are just bringing everyone down. You know, it’s different when interest rates are high and the economy is booming, but right now the economy is stable and interest rates are high. And I think that’s why a lot of people feel like this economy isn’t working for me, and I’m one step away from completely ruining it.
This is why I love talking to you and other economists. Over time, I learned that there are economic indicators and there is how people feel about those indicators, which can be more important than the indicators themselves.
And as far as I can see, the escalating conflict in Iran is already having a major impact. It’s only been a few weeks, but I’m seeing people tracking oil futures and theorizing that we’re headed for gas shortages similar to the 1970s. What do you think?
Yes, I think the main thing people pay attention to is gas prices. They are already up. The increase is not as high as during the Iraq War, but that is because a large amount of oil is currently being produced domestically. I think we’re actually a net exporter of oil right now. This means that instead of buying oil from the Middle East, we can buy our own oil.
This price will be a little higher. Although there is less supply to choose from, the impact is not as severe as during the Iraq War. The country wasn’t producing that much oil.
So I think the economic impact on people will be limited to some extent. I think people would still be angry even if oil were more expensive. People are very sensitive to it. That’s a very remarkable thing that they see. But I don’t think it contributes much to overall inflation.
And the Fed doesn’t like to worry about oil prices. This is because oil prices are out of control. They know that it’s not going to be solved by raising or lowering interest rates.
But when interest rates spike, it can cause significant volatility. Such disputes cause interest rates to rise and fall at the same time. Rise due to inflation. Global uncertainty has prompted investors to put their money into safe-haven assets such as U.S. Treasuries and mortgage-backed securities.
Therefore, push and pull can cause significant volatility. Because one day an investor may be more focused on inflation, the next day they may be more focused on risk and put their money in a safe place. Therefore, as long as this conflict continues, interest rates will likely rise or fall significantly. But I don’t think it matters that much for long-term interest rates or long-term inflation.
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