The Federal Reserve makes AI a housing problem

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about housing’s AI problem.  Related to this episode:  Does housing have an AI problem?  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  HousingWire Mortgage Banking Summit – October 1  More info about HousingWire  Top 5 Trending:  Why the 2026 mortgage layoff cycle looks different   Does housing have an AI problem?  Keep the momentum going with the AI Summit Playbook   Is Zillow having its AOL moment?  Toll Brothers luxury moat meets a tougher market test  Want more from Sarah? Don’t forget to subscribe!  The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:11Welcome, everyone. I'm joined today by my podcast partner, lead analyst Logan Motoshami

00:16to talk about housing's AI problem. It's going to be a great discussion. But first,

00:20let's look at the top five trending stories on HousingWire.com. At the top is why the 2026

00:26mortgage layoff cycle looks different. Followed by Logan's article we're discussing today,

00:31does housing have an AI problem? Then we have our AI Summit playbook from last week's event.

00:37And is Zillow having its AOL moment? Finally, we have Toll Brothers Luxury Moat meets a tougher

00:43market test. Okay, we're ready to go. Logan, welcome back to the podcast. It is wonderful

00:49to be here. What a crazy week on the AI front, as I've seen governors in both red and blue

01:00states

01:01putting moratoriums on data centers, and surveys are just everyone hates data centers now.

01:09And it's almost midterms. And we always talk about two-year political cycles here in America. So

01:14there's limits to what you think you can get away with without, you know, people fighting back. And

01:22I was asked this question, you know, you know, is housing being impacted by the AI boom? And so I

01:30thought, you know, we wrote that article on on Friday, but I thought you and I could just address

01:35this. Does housing have an AI problem as well? No, I think it's it was such a good article. And

01:42it

01:42follows. So our newsroom has done a series of articles on how the AI data centers are impacting

01:49people in our industry, really looking at it from first of all, like, if you're a real estate agent,

01:54how are you dealing with like, what it might mean if you have a bunch of data centers around? How

01:59do

01:59you advise your clients? We talked to appraisers about does that change, you know, the value of the

02:04houses around it? Or does it make it go up? Because of that, we've talked on the builders daily,

02:10we published an article about the land use and is, you know, it's really squeezing

02:15home builders, some home builders. So yeah, we've covered this issue. But I feel like you came at it

02:20from a completely different angle, which was the Fed. Yeah, I mean, of course, there's all these

02:26different variables with AI, but the Federal Reserve went from two to three rate hikes, or cuts to two to

02:32three rate hikes. And the hawks are all making AI the big variable here without maybe maybe not the

02:39biggest, I think the conflict is probably the biggest, but they're always mentioning AI. So

02:45that's why I wanted to like, when I went back and read all I mean, I could have, I could

02:50have written

02:50like 30 or 40 different little things about AI being said, but, you know, I took the two big hawks,

02:58Beth Hammock, Neil Kashgar, even Lori Logan addressed this to a degree, but they're saying AI is

03:06inflationary. Of course, electricity costs go up, people feel that, but you know, the money coming

03:10into the economy is an inflationary impulse, not a disinflation, where a lot of people thought AI was

03:18about to take all the jobs and the unemployment rate was going to go up and millions of people are

03:21going to be, you know, who are going to buy homes if nobody's working. That's a silly notion. In any

03:26case, it is a housing problem in the sense is that I always structurally believe 65 to 75% of

03:34where the 10-year yield and mortgage rates go is Fed policy. So if the Fed hawks are always mentioning

03:40AI,

03:42yeah, it's a housing issue because, you know, the Federal Reserve says policy is not restrictive for

03:50the general economy because AI is helping growth and investment. It is restrictive for the housing

03:57market, but, you know, tough. That's, this is what it is. So yeah, so I would, I would say AI

04:05is a housing

04:06problem on that front. So this is very confusing if you're just sitting out there and you're like,

04:11okay, I thought, I thought AI was going to destroy all of us. It's going to hurt the economy and

04:15hear

04:16the Fed and other people. I mean, they're not wrong. You've said from the beginning that you did not

04:20think AI was going to take all the jobs. You thought that was a ridiculous thing to say,

04:23but here they're saying, hey, this is one of the reasons that instead of cutting rates,

04:28we might need to hike rates. You know, in general, there's, there's, there's just a mad rush around

04:35the world to get AI up and going. And I think one of the things is a lot of countries,

04:41population growth

04:42is slowing down. We can never replace the population boom of the last century. So countries

04:49are aging, Japan's dying out, Europe, China. The next wave of growth and productivity, everyone

04:58kind of puts all their chips onto AI. So that productivity growth can be disinflationary when

05:06it eventually happens. But I, I've always, you remember that, that crazy lady that was on that

05:13airplane who said that bleeping is not real. She thought the guy was a lizard. Oh gosh, I don't know.

05:21There was a meme. There was a lady who was on a plane and she thought this, the guy next

05:24to her

05:25was a lizard. And she said that leap is not real. So I kind of always use that meme when

05:31people talk

05:32about a productivity miracle and productivity is going to take off. I, I just, I'm very suspect

05:38of productivity taking off. It can get better. It can improve, but the federal reserve, on another

05:44hand, their old school model, if you want to target 2% inflation, you got to get wage growth under

05:513%

05:52because productivity is really running at 1% and that's how you target 2% inflation. Well,

05:58productivity is picked up, but not anywhere in a miraculous form or anything. So, uh, uh, Kevin

06:05Warsh, Lisa Cook, there are a lot of fed governors who say that productivity will be disinflationary,

06:10but for now it isn't. And, uh, a lot of people are still betting on that the next growth and

06:17productivity

06:18miracle will be AI and robots and everything. And, you know, countries will be able to handle an aging

06:24population as robots will do manual labor that other people can't. But for now, um, there's a lot

06:32of money injected into the economy. There's a lot of investment. There's a construction workers. Like

06:37it's, we're not building commercial buildings anymore. Single family starts and permits are down.

06:43Apartments aren't really growing in any fashion. So where's the labor going to? It's going to data,

06:48uh, uh, centers. Uh, so that's kept the employment data. So, so you have variables that are keeping

06:54the economy going, but for right now, they're not disinflationary. Now, of course we're in a time

07:00where it's a little bit funky because we had tariffs and then we have a conflict, right? I mean,

07:05the growth rate of inflation was heading toward 2% until the tariffs came. And then they were going to

07:09let the tariffs do that one time price. And then the conflict. So we have a lot of other things

07:14coming in play here, but the Fed governors, the hawks, you know, are saying AI, AI, AI, AI investment,

07:24AI spending, you know, inflationary. So, uh, uh, that, that's, that's, that's, that's fair game

07:30to, to, to use AI for that. So in the bad news for housing, there is like where we hope

07:37like, oh, we

07:37could, we should see an end to this conflict at some point, thought it would be way before now.

07:43There's no end to the AI investment that we see. I mean, we're just at the start of that.

07:47There isn't, but what if you get a mass moratorium? What if, what if, what if, what if the entire

07:53country just revolts against AI, then you start, you know, seeing echo terrorism again, you know,

08:00remember where, you know, people are attacking certain land projects because it's bad for the,

08:05uh, uh, um, environment. So, you know, the backlash right now to me, it's, it's, we're getting

08:12close to midterms. And I think that poll had 75% of the population. Now I don't take surveys worth

08:18of anything, but in general, governors aren't really doing this moratorium, Republicans and

08:24Democrats, if they think AI is popular. Of course, there's a lot of local politicians who've got a lot

08:29of money now, you know, cause of, uh, AI, but man, it's just the history of inflation. You go back

08:36thousands of years. Politicians just don't survive inflation. They think they can, but people always

08:42tend to revolt when prices go up. So that's an issue. And for, for mortgage rates, you know,

08:48the, this conversation has been had before that AI, the AI boom is keeping rates higher than what it

08:55should. And my, my thing is that if Fed policy is getting to neutral at 3%, then, you know, it's

09:02hard

09:02to get mortgage rates under 5.75, but we've kind of been in a range between six to 6.85

09:07this year. So

09:09there's, there, there's limits to what you can, you can say about AI and what mortgage rates can do.

09:14But for now, um, the Fed, the Fed says, Hey, this is an issue. This is inflationary. And our hawkish

09:20stance is based on the AI spending and the deflation that it's causing in the economy.

09:25I, I definitely agree with you that there is a lot of anger out there. And I think that this,

09:30this is something that people feel like they can direct it at, but it's also, you know, super

09:36ironic. Almost all those people probably use chat GPT or expect, they don't even know that it's running

09:41in the background. We just had an AI summit for housing and home builders, realtors, mortgage

09:47companies, everybody's using AI to make things more efficient or to lower the cost or whatever

09:52they're doing. I mean, most people are using AI. So where do they think that comes from?

09:58It's like when socialists rip on capitalists, but they're all wearing, like, you know,

10:02they're all having an iPhone and they're wearing, you know, you know, uh, clothes that you can't get

10:08in countries. I, I've always like, stay away from that. Cause I think it's a crazy capitalism

10:13versus social is the political fight that people do all the time. But, um, yeah, I mean, AI is part

10:19of

10:19our, I mean, God, look, I have, I just created an AI video of me shaving my head because some

10:25guy

10:25offered me a million dollars to shave my head. So, all right, here we go. Send me that over.

10:31There it is. You know, um, how did you look, wait, how did you look bald? What, what did you

10:35look like? You know what it, it, it, it, that AI version doesn't look like me bald. So it looked

10:41funny, but I mean, I've, I have, I've, you know, when I used to play basketball or coach basketball,

10:46I used to have a bald head. So, uh, uh, those, those photos are out there. I kind of had

10:50like a

10:51Tupac Shakur look, you know, uh, uh, last time I was, uh, uh, bald, but, um, but yeah,

10:58I mean, everyone uses AI. It's just whenever prices go up and the inflation goes up, everybody

11:04needs somebody to blame. And if the federal reserve is saying we need to keep rates or we

11:10need to hike rates because of AI, then yeah, then it's, it's an issue. It's, it's, it's fair

11:15game, uh, uh, to, to, to be put out there. Cause you know, when I, when I talked about the

11:20Trinity game plan, when Trump became president and said, he really wants three things. He wants

11:26a lower dollar. He wants lower energy prices. He wants lower mortgage rates because people

11:30pay for gas every week. Uh, people, millions of people buy homes and sell home, move, refinance,

11:37whatever it is. Those are things that consumers feel good about if they go lower. AI is one of

11:43these things that, you know, electricity bill goes up in your areas. You know, you've got some

11:47weird sounds coming where, where, if you live here. So I, you know, I, I, I could see the,

11:53the contention against, uh, that and you, you see, got me Republican and, and, and Democrat

11:59governors are putting moratoriums like crazy. You know, this is a, in a sense, a deep growth

12:04or kind of a premise, but this is what happens in political cycles and business cycles every

12:10two years. If there's something injecting cash and it's really big and it causes inflation,

12:16people are going to run to that and go, it's their fault, you know? And plus we've always,

12:20you and I said about this, the AI people have been crazy in terms of, Hey, this is going to

12:24be

12:24great. You're all going to lose your jobs, but don't worry. You'll, you'll, you'll be able to

12:29make some funny videos and, and, and do work in an instant second, anything you want. So

12:35not the best start, you know, for this, literally the biggest fail on PR ever. So, so even the people

12:44who own those companies, not only, Oh, you know, it's going to take all your jobs before it wipes

12:48out humanity before, you know, we're all gone because of it. It's like, why would you roll that

12:53out? Why is that your message? And then of course you're going to face backlash. And then on the

12:59local level, you've had a lack of transparency. So, you know, some of those local officials are

13:03getting paid. They've been on trips. They, so it's, it's like the perfect storm, but it's like,

13:08it, part of this was absolutely foreseeable in the way that they rolled it out.

13:13I'm just going to go to my original premise. We made a movie about this in 1984, I think.

13:20And I'm telling you, Skynet is laughing at us because it's going, homies, we're just coasting

13:28through and you guys are all, I mean, if you listen to some of these crazy stories about what

13:33AI is doing, you know, within companies and stuff like this. And I'm like, we all deserve to get

13:39whatever comes to us because literally we made movies about Skynet and AI taking over and we're

13:46just up there. Oh yeah. Let's just build them. Let's just create the greatest energy. I mean,

13:51we can make a movie about this. They're like the dumb humans are giving us the, all the energy we

13:56need to take over the world and look at them, you know, just to create some crazy videos within two

14:01seconds. Go ahead guys, suckers, you know? So yeah. I just find the person who makes AI videos

14:07more than anyone I know. Yeah. But it's just like, I, I, I, I say, Hey, listen, Skynet wins at

14:13the end,

14:13man. You can't, you know, I'll play the John Cotter role. That's what we'll do. Oh, you,

14:19you'll be like Sarah Cotter and I'll be low, you know? Yeah. You know, finally a role I can get

14:26behind. Yes. Yes. Yes. And I'll be the, the Logan Cotter or whatever, you know, and we'll,

14:31we'll take on the AI, do chart battles. I need to get in much better shape. I need to get

14:36a much

14:37better shape for this, but that's better than Chloe. Okay. Yeah. I just think that this is

14:41one of those issues. I'm really glad you wrote the story because I think that people haven't

14:45connected the dots as much. Like this affects housing in a lot of different ways and the Fed and

14:51their, and their stance towards it is going to be one of the longer lasting ones. Yeah. I think,

14:56I mean, not a lot of people follow Fed statements, but you know, in that article, when, when it was

15:01written and people read actually what they said, they're like, Oh, wow. Okay. You know, you know,

15:08this is like, I mean, I could have put like 40 or 50 different statements from a bunch of Fed

15:13members,

15:14but yeah, you know, if, if, if I'm a 65 to 75% Fed policy guy, then yeah, what they

15:20say about AI,

15:20matters. So this is the world we live in right now. The world we live in. Okay. It's never,

15:26it's never a positive sign when, okay. We referenced 24, but now we're referencing the

15:31Terminator. Listen, can we just go back to, what did we say we were going to do? Like a little

15:36house

15:36on the prairie or something? You can't, you can't close this genie bottled out. AI took off,

15:41Skynet wins. We've all seen it. I'm just, you know, do what you can, you know, fight the robots.

15:47Well, we'll, we'll, we'll, we'll figure out a way, but what was that other movie? I robot where,

15:53you know, you had these, you had these things where like people were kicking the robots that

15:56were trying to like move. And I was like, guys, guys, no, eventually they're going to be really,

16:02really good. And they're going to whoop you. And we've seen this movie before. Like we've

16:06literally made movies about robots and AI taking over everything. And we're like sitting here helping

16:11them. So I'm like, come on, wake up society. That's what I need to do. I need to wake up,

16:16get everyone up and we'll have an AI revolution. You're John Connor. There you go. I was using AI

16:21yesterday for a very, for a presentation I was doing. It was doing a great job. And I said,

16:26please. And thank you for this very reason. Cause I'm like, you never know when it's going to become

16:30sentient. It'll remember Sarah Wheeler was nice to us. So that's what I'm hoping for.

16:35Hey, hey, lay the ground works, but the war will come eventually.

16:39Here we go. Logan, thank you so much. We will talk again soon.

Category

Transcript

Comments

Recommended