Artificial intelligence, political upheavals and labor market volatility are all weighing on consumers this spring. Redfin Chief Economist Daryl Fairweather explains how agents can help.
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It’s scary out there.
Anthropic CEO Dario Amodei said he’s “open to the idea” that Claude could become sentient, accelerating fears that artificial intelligence will make white-collar jobs obsolete. The labor market is restless, with millions of Americans praying they’re not the next to be thrown into lengthy unemployment. Then, there’s the country’s involvement in an escalating conflict between Israel and Iran — causing netizens to soothe their fears about a potential WWIII with memes.
Redfin Chief Economist Daryl Fairweather understands all these concerns, even if some of the conclusions are more based on fear than fact. However, she offered some balm to real estate agents ahead of the spring homebuying season, which, hopefully, will 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 work that real estate agents do is talking to people through their emotions about real estate, managing what one spouse wants versus another, maybe even versus what their parents, who might be giving them a down payment, want,” she told Inman. “I don’t think people are going to be satisfied by talking to a chatbot about those kinds of issues.”
Although AI-powered chatbots have taken over the task of dishing out statistics and other general market and listing data, Fairweather said they lack one thing: human experience. And that experience is what consumers need this spring, as anxieties influence their real estate moves.
“There’s nothing that can really compare to an agent that has physically gone to homes, that has engaged in human negotiations and managed those human experiences,” she said. “And I think that the skill of being a real estate agent is something that you can only gain from living it for years. Those intangible qualities are even more important.”
The following conversation has been edited for length and clarity.
Inman: Good afternoon, Daryl. Let’s jump into it. Last week, you and one of our editors had a fun conversation on X about artificial intelligence and the labor market. The conversation about this tends to be at extremes — either that AI spells doom for everyone or that it will collapse and become irrelevant.
What part of the conversation do you believe is being 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’m basing this opinion on my own use of AI and conversations I’ve had with others who use it. There is some evidence that AI is impacting the macroeconomy. So, for one, it’s all the spending on data centers. I think it’s like $50 billion. That is a very significant amount of money, and it is driving GDP growth right now.
Without that investment, GDP growth might be much lower. Without that investment, interest rates might be lower because if the economy were not still growing because of all this capital investment, the Fed would have to lower interest rates. And it’s also possible that all this capital investment is crowding out other types of growth, debt and investment.
When local investors decide where to put their money, they look for the highest return on investment. In the early 2010s, there weren’t many great options to put your money into because the economy was sluggish. There wasn’t a lot of productivity growth. There weren’t great places.
So that’s one of the reasons why mortgage rates were so cheap. It was because U.S. real estate seemed like the best place to park your money compared to any of the other options that were available. But now you can park your money, now you can lend your money to these AI firms, and they will put it into data center infrastructure, and they are telling these investors that they’re gonna get great returns on this investment.
Maybe that’s just a story that they’re telling investors, and the correction is coming. Maybe it’s the truth, and these AI data centers will be utilized, and they will be profitable.
It doesn’t really matter so much for right now. I think what you need to know right now is just that investment in AI is very significant. It’s taking up a lot of capital, and it could be crowding out other types of investment, such as residential real estate.
Let’s focus on data centers for a moment. I’ve been following the pushback against data centers from various communities, with people concerned about the impact on energy costs and the environment. How do you think this movement might impact the way investors look at the AI sector? And how might that sentiment trickle into the real estate market?
Yeah, so the GROK data center has gotten a lot of negative press for running on dirty fuels and emitting pollution to the surrounding areas. So I think people are looking at that example and rightfully saying, ‘We don’t want the solution right next door to us. We don’t want this data stuff happening for us.’
Some of those fears might be overblown because it doesn’t really matter. Most people are on the national grid. So whether the data center is a thousand miles away or right next door, it’s still using energy from that grid. So that part might not matter if it’s right next door.
But the part about … the data center emitting pollution, I think, is very concerning, something that residents should speak up about.
Yeah.
But more broadly, all this investment in AI creates winners and losers. Because, like I said, [AI] sucks up all the capital, and that means borrowing for a mortgage is more expensive. It also sucks up a lot of energy, making energy more expensive.
There’s been a push in New York and Illinois to build nuclear energy capacity, which I personally think is the right direction. I think that we don’t have enough nuclear energy, given that it doesn’t emit any carbon.
I know there are concerns about nuclear waste, but it’s a much better option than coal or natural gas, in my opinion. So, in some ways, it’s accelerating energy adaptation, but it’s still kind of the centerpiece of the economy.
Speaking of the overall economy, I was looking through Redfin’s latest set of reports before our call. There’s more than enough anxiety to go around. How do you anticipate that will impact real estate activity in the coming months? I imagine it would be difficult to sign a 30-year mortgage when you’re unsure if AI will take your job, or if our country is about to be plunged into another war.
I think the main reason that people feel bad about the economy goes back to interest rates being high. And there is a connection, I think, between interest rates being high and what’s happening with artificial intelligence because, like I said, if it wasn’t for all this artificial intelligence investment, the Fed probably would have already dropped interest rates by now.
But those higher interest rates mean that businesses have to pay more money on their debt because they have less money left over to increase, you know, their employment. They’re not hiring as much. They’re not backfilling as much. So people see that, and they worry.
I think that higher interest rates are just keeping everybody kind of down. And you know, it would be one thing if we had higher interest rates and a booming economy, but we have a stable economy and high interest rates. And I think that leaves a lot of people feeling like this economy is not working for me, and I am just one pink slip away from being totally screwed.
This is why I like talking to you and other economists. Over time, I’ve learned there are economic metrics, and then there’s how people feel about those metrics, which may be more important than the metrics themselves.
And from what I can see, the escalating conflict in Iran is already having a big impact. It’s only been a couple of weeks, but I see people tracking oil futures and theorizing that we’re headed toward a gas shortage, similar to the 1970s. What are your thoughts?
Yes, I think the thing people will notice most is gas prices. Those are already up. They’re not up as much as they were during the Iraq War, and that’s because we produce a lot of oil domestically now. I think we are actually a net exporter of oil nowadays, which means we can buy our own oil instead of buying it from the Middle East.
This will come at a slightly higher price. There’s less supply to choose from, but the impact isn’t as severe as during the Iraq War. We weren’t producing as much oil domestically.
So I think the economic impacts on people will be somewhat limited. I think people will still get pissed off if their oil is more expensive. People are very sensitive to that. It’s a very salient thing that they see. But I don’t think it’s going to contribute all that much to overall inflation.
And the Fed doesn’t like worrying about oil prices because they’re outside its control. They know that it’s not something that they can fix by raising or lowering interest rates.
But if interest rates spiked, it could cause a lot of volatility. Because of a conflict like that, it pushes interest rates both higher and lower at the same time. Higher because of inflation; lower because global uncertainty makes investors want to put their money into safe assets like U.S. Treasuries and mortgage-backed securities.
So that push and pull can cause a lot of volatility, because one day investors might care more about inflation, the next day they might care more about risk and putting their money somewhere safe. So we’ll probably see a lot of ups and downs in interest rates as long as this conflict is going on. But I don’t think it’s going to matter much for long-run interest rates or long-run inflation.
Email Marian McPherson
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