I’ve had the opportunity to both author and co-author several pieces in Housing Wire about technology-specifically Artificial Intelligence (AI) – in the housing ecosystem; for the most part, the work has been received well. I have received a lot of feedback that suggests the need for some additional nuance, prompting the need in my view for a piece that starts the conversation about both the opportunities and limitations of AI in the housing transaction ecosystem.
With Samir Saluja of Ahrian LLC and Vivek Bhaskaran of Questionpro, I compiled the feedback and also surveyed a swath of professionals who work in different aspects of the housing ecosystem. We discerned three distinct schools of thought, which are, perhaps unsurprising:
1. Technocratic View: The technocratic view is that technology will not simply enhance the housing transaction ecosystem and experience but will supplant all other elements and introduce seamlessness, efficiency, and, in effect a rinse-and-repeat process. This view elevates AI and Data above all else and sees digital transformation as not only inevitable but singularly powerful.
2. Balanced View: The balanced view suggests the notion of “people + machine” as the right combination for the housing ecosystem. In this view, technology plays a key role for valuations, analytics, propensity models, data modeling and scenario planning but leaves the last-mile customer experience to people.
3. People-first View: The people-first view suggests that technologies are only assistants/handmaidens to the real-estate agents who are responsible for the navigation of the shoals of process but also for the historical experience and wisdom to impart to housing buyers. This view focuses more on the individual consumer experience than on the business-to-business side of the ecosystem.
These three schools of thought have points of divergence and points of convergence. Nowhere is technology and AI deemed irrelevant for instance, but the degree to which it is paramount is variable depending on the view espoused.
One particularly savvy and articulate respondent said this, “I do not believe Real Estate for personal use will exist without a ‘human touch…’ Conventional residential real estate is typically viewed in person with an agent, the sale is often sentimental for the seller…so the managing of emotions is necessary…the same is true of the buyers’ side as well. With that said, AVMs are a great resource.”
This espousal of the “Balanced View” suggests that technologies are important and form one pillar of a two-pillared strategic model.
While each of these views has strong points, each has weaknesses as well; sorting through these will be incredibly important to the industry, which is the bellwether for the entire economy and represents the largest asset class in the world; the housing stock in the US alone is worth over $32 Trillion, a number almost unfathomable for most industries.
Of these weaknesses, one of the most interesting to mention is the “partisan” view towards AI that still obtains in the marketplace. For pure technocrats, AI is a “God Tool.” For them, all decisions converge on a rational view of data and technology. For those who are skeptical, AI is seen as simple and static, just as another “way” of processing data. We know from experience that both of these views are overstated. AI systems learn and improve as they ingest data points, which are then compared to reality. AI systems can ingest, digest, and interpret data at a speed and scale that was heretofore impossible. Sure, AI systems are as good as their assumptions and as good as the data that train them. But they are neither static nor perfect.
Given this, it is up to industry thinkers to understand the housing ecosystem not as a black-box but as a series of explainable steps that can be changed, eliminated, or enhanced by technology. AI can be “legible” and “visible” so that its assumptions and processes are clear; as such applying it where it is valuable and refusing to invoke it where it is not is the key to wisdom in this incredible industry.
We know things change. We also know we can direct that change. Artificial Intelligence offers opportunities for us to direct this in a positive manner but also has limitations that require human wisdom and discernment to deal with.
To learn more about Romi Mahajan and what he is doing with AI check out Quantarium.com.