Welcome to this month’s installment of Dear Urbaneer, where I take on real estate questions from my inquisitive readers. This month, a reader is wondering about AI in real estate.
Dear Urbaneer:
It seems like AI is integrated and influencing nearly every aspect of our lives, and changing rapidly all the time. How is AI affecting real estate? How is it changing the experience of buying or selling a home? And beyond the practical applications, could its growing influence affect employment, and by extension the real estate market?
Signed,
AI Wondering What’s Next
Here’s my reply
Dear What’s Next,
You are correct; AI is everywhere and seems to be at the centre of every conversation, spanning multiple industries. In many cases, AI is the measure of progress, offering conveniences, efficiencies, and speed in various products, services, and experiences that didn’t exist even a couple of years ago.
It’s important to note that this isn’t the first time we’ve seen technological advances completely change the world we live in, and change the trajectory of how we live. Look at the industrial revolution and mechanization, electricity and plumbing introduced into homes, household appliances, automobiles, personal computers, and the internet, and so on. And as these milestones in tech appeared, benefits were many, but they also affected a lot of things around employment and other aspects too.
That’s true of AI too, and there is no denying the tremendous upside in terms of efficiencies and potential cost savings across a number of industries. But on the other hand, AI seems, and feels, a little different than some of these other technological advances. There is a grey area with much of its use, which is inherently problematic when trying to distinguish fact from fiction, because it is easily exploited.
It’s also moving and evolving so fast that jobs -lots of jobs- are affected- in many cases reportedly (which we will explore more below) being eliminated, or changed, although this is not uncommon when transitioning to a new tech reality- the most recent being the widespread adoption of computers.
As for real estate, AI is the next step in the digital dwell hunt, both for the search for a property as well as the industry around it. The question- and challenge -is how to ensure it’s accessible- and trustworthy.
Meanwhile, the larger conversation around how AI will change the workforce and potentially the real estate market, as homeowners may face employment uncertainty. We’ll examine those trends from both sides
Let’s explore what might be in store for real estate and AI. As we do, I’d like to point out, for interest’s sake, that every image in this blog was created by AI.
AI And Real Estate Listings
In recent months, you may very well have been searching real estate listings and come across photos where the furniture, decor, and other aspects of a room don’t seem to match the dimensions, or where something else seems a little “off” visually. This is a good example of needing to balance the benefits of AI with responsible, truthful use, and demonstrates how AI can easily be used to manipulate reality- at the detriment of the consumer.
This is part of the reason that the Real Estate Council of Ontario (RECO), has recently introduced guidance on the use of AI in real estate staging photos, joining similar guidance from the Canadian Real Estate Association and TRREB. For CREA, the guideline is that virtually enhanced photos are prohibited on the MLS system if they misrepresent a property in a way that would affect its value. TREEB, similarly, allows AI-generated listing photos, but they must accurately reflect a home in real life. Here is RECO’s recent statement, which asks for transparency around AI use in images, fact-checking, using human judgement, and keeping client information out of AI platforms. These are all common-sense tasks, but are necessary to state and formally outline.
It’s one thing to help furnish and decorate a space in a certain way to inspire, to demonstrate potential use, and to present a home in its best light- which is part of why physical staging is so important when a home is for sale. However, there have been growing incidents of using AI to make a home appear different then it is in real life -which is misleading- and prompted the various real estate governing bodies to issue guidance.
For the most part, listing photos are accurate, but there have been some situations recently that you may have read about in the news. For example, a room might be AI-staged in photos with lots of furniture that could not physically fit in the room, so the appearance is that the room is bigger than it actually is. That’s problematic on its own, because furniture plays an important role for buyers too. In some cases, layouts were altered. Appliances were added that weren’t there IRL. Lamps appeared in areas where there weren’t actual outlets.
There are some really extreme cases too, outlined in an article from Real Estate Magazine: “Enhancing vs. Misleading: Real Estate’s AI Photo Evolution Enters Enforcement Phase“. Described here are realtors who crossed the line, using AI to alter a property in a way that didn’t exist.
This article – “Realtor, Agency Apologize For AI Image That Altered Facade Of Quebec Home For Sale” – talks about a Quebec realtor who AI-staged a home, ultimately changing its facade by adding windows, an outdoor fence, making the garage door look bigger, taking out an interior door, and changing the interior lighting.
For consumers looking through real estate listings, it’s important to be aware of what you are looking at. Look for labels for altered images, or other “clues” like inconsistent shadowing, oddly rounded furniture, furniture that doesn’t quite fit a room, and flat or overly even lighting. Look at photos critically, and ask your realtor for their help and advice to decipher photos in a listing.
Here are a couple more articles on AI and real estate listing photos for background information: “Rising Use Of AI-Staged Real Estate Photos Raises Questions About Misleading Homebuyers“, and “Love It Or Hate It: The Rise Of AI Staging In Canadian Real Estate“.
AI, Employment, & The Toronto Real Estate Market
Another big topic around real estate and AI is the real estate market itself, and the macroeconomic influence that employment, and by extension, the real estate market might have. There is a split opinion on this, with some groups fearing massive job loss in the years to come, especially in white-collar jobs, while others think that the reality is less dire. This article from the Toronto Star – “Why Canada Should Treat AI As A Productivity Challenge, Not A Countdown To White-Collar Extinction” has a lot of good stats in it.
AI adoption by business tripled in two years, according to Stats Can, particularly in information, and cultural industries, finance and insurance, and professional, scientific and technical services. However, Stats Can also shows no widespread job loss during that same period. As this article points out, this is important to Toronto specifically, because it reflects much of the type of employment in Toronto. The author of this article says that there is an opportunity for companies to align with AI growth to maintain productivity, and pivot to avoid job losses.
In the bad news department, this now-famous interview from last year with Axios from Anthropic CEO Dario Amodei said that half of white-collar jobs could be cut in the near future because of AI: “Behind the Curtain: A White-Collar Bloodbath“. In the months since this interview, attitudes have shifted slightly, but uncertainty does remain.
On the other side of the argument, in a recent report outlined in this Canadian Press article, “TD Economics Sees AI-induced ‘Job Apocalypse’ As Unlikely Despite Concerns“, TD Economics suggests that predictions of widespread job loss are overblown, citing that the job landscape and the way certain jobs are done will most certainly change; the AI job apocalypse, as they call it, is unlikely.
They cite several factors, including that it’s not economically viable, based on their research, for AI to be completely autonomous. While some tasks can easily be automated within roles, complete roles replaced by autonomous AI is another thing altogether.
The other issue is the speed of AI adoption, which is currently uneven across industries.
TD Economics does acknowledge the possibility of job loss, and that it would push up the unemployment rate, but it feels that the gradual speed at which AI is actually being incorporated might create more jobs, as it makes other roles obsolete.
Meanwhile, in its recent report, the International Monetary Fund, upgraded its world economy forecast slightly. Specifically on AI, saying that the growth of AI is countering some of the economic downfall from the beleaguered oil and gas sector. In terms of employment though, the IMF describes AI as a “slow-moving tsunami”, and expects it to affect 40% of jobs- either augment them, downgrade them, or eliminate them.
While the scenario is that AI could affect employment, income and the real estate market in the longer term, the more likely scenario is that the uncertainty around what’s in store, thanks to AI that may make consumers reluctant to spend, which could have a more near-term impact. Buyers may be cautious about taking out a mortgage and spending too much, which can pull prices down and slow the market. But, on the other hand, perhaps there will be job creation as a result, which could buoy the market too.
How AI Is Changing Home Searches
In many ways, AI is changing how we search for everything. In the ‘old’ days, you’d type your query into Google, and Google would pull up all the top websites to answer your query. Now, queries are more comprehensive, and so are the answers- thanks to AI. AI overviews and chatbots deliver more specific information, more easily. It’s a more conversational experience too.
During your dwell hunt, you probably plug in filters around price, home style, and other features that are on your wish list. Now, if you are searching using a home AI search feature, you can ask more specific things. You can ask about specific features, like a renovated kitchen, a finished basement or proximity to transit, and some tools can even search listing photos to identify these features. Some offer property summaries, and you can often ask follow-up questions too.
Specific companies have proprietary searches and are rapidly rolling out in the United States. In Canada, this is happening too, with some company-specific AI search tools, and some other apps that offer a similar, immersive experience. This one is evolving, but I can definitely see it personalizing the home shopping experience.
But will it be more personalized than the services I provide as a realtor? As I enter my 36th year as a seasoned realtor with a multi-disciplinary education in urban planning, the history of Toronto and the psychology of housing & home, plus decades of experience in design, renovation, and return on investment, I save my busy clients time by executing comprehensive deep-dive assessments of potential properties that match their wishes, wants & needs spatially, stylistically, financially, and culturally – tailored specifically to their lifestyle and stage of life – before they even cross the threshold. Grounded by intuition, observation, and knowing exactly what questions to ask, what I do is as much an Art as it is a Science. So how may I serve you?
Thank you for reading.
Sincerely, Steven
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Since 1989, I’ve steered my career through a real estate market crash and burn; survived a slow painful cross-country recession; completed an M.E.S. graduate degree from York University called ‘Planning Housing Environments’; executed the concept, sales & marketing of multiple new condo and vintage loft conversions; and guided hundreds of clients through the purchase and sale of hundreds of freehold and condominium dwellings across the original City of Toronto. From a gritty port industrial city into a glittering post-industrial global centre, I’ve navigated the ebbs and flows of a property market as a consistent Top Producer. And I remain as passionate about it today as when I started.
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