If you want it or not, artificial intelligence has already started to reshape many aspects of daily life.

Among other things, it can enhance our productivity and revolutionize medical research. However, with each new technology come positives, such as opportunities and negatives.  

To tackle this development a bit deeper in this article, I will work out how AI affects real estate, and at the end, look in my magic crystal ball.

It will cover…

  • Ten general benefits and risks of AI in different life areas
  • 16 effects of AI on real estate 
  • Future scenarios of how AI will affect real estate


10 General Benefits and Risks of AI in Different Life Areas

To tackle the question of how AI will affect real estate, it’s a good idea first to go from the general to the more specific. So I will first discuss AI’s generally positive and negative effects in different areas of life.

Based on that, I will identify areas of the real estate industry that see similar effects and extrapolate likely future scenarios.

5 General Benefits of AI

Let’s start with the positive first: 5 general benefits of AI.

1) Improved Efficiency and Productivity 

This one is obvious. Once you have overcome the learning-curve various AI tools can increase your efficiency and productivity by automating routine tasks, saving you time and money. 

2) Smarter Decision-Making

Since AI can help you spot trends and patterns, it can help you make better data-driven decisions.

3) Personalization

AI can understand individual preferences and tailor products or services accordingly. 

So it can deliver customized experiences in various areas where prospects and clients need individualized communication. Hence, basically all areas of business.

4) Medical Research and Achievements

AI can assist in early disease diagnosis, personalized treatment plans, and drug discovery.

Regarding early disease detection, for instance, AI algorithms can analyze medical imaging data, such as CT scans and X-rays, identifying subtle signs of diseases like cancer.

Or regarding personalized treatment plans, it can tailor treatments to individual patients based on their unique genetic makeup, lifestyle, and medical history.

When it comes to medical research, it can be used to find patterns in vast amounts of data needed when you want to analyze protein structures, also called protein folding (source).

5) It Can Drive New Discoveries

Examples like the ones I mentioned regarding AI in medicine show that AI can drive inventions and creative solutions by analyzing vast amounts of information and generating novel ideas.

You get a really potent cocktail when you combine AI with synthetic biology, which is the next big thing in the makings. 

For example, there are thousands of plants with medicinal properties in the Amazonas, which could take hundreds if not thousands of years to analyze. 

With AI you could do this in a fraction of time and use synthetic biology to reproduce these substances at scale without flattening the Amazonian rainforest. 



5 Risks of AI

Well, with the positive, you can live. That’s easy. So like me, you are probably more interested in the negatives, the risks.

It’s only natural to be more interested in this because we humans tend to give more importance to negative experiences than to positive ones. This is called the negativity bias.

So let’s check them out…

1) Job Displacement

This one is the first one you think of, I am sure. I wrote about this one in my article about whether AI will replace real estate agents.

So while AI can make lives easier, it will also replace some jobs, especially the ones involving repetitive tasks.

2) Privacy Concerns

Being able to process and learn from vast amounts of data sets is positive, on the one hand. On the other, it can lead to privacy issues.

For instance, imagine a facial recognition system deployed in a public space like a shopping mall or city center. 

Without their knowledge or consent, the system could continuously scan and identify people as they go about their daily lives.

This could lead to massive databases containing sensitive personal information, such as individuals’ locations, habits, and social networks.

If these databases were to be misused, leaked, or accessed by unauthorized parties, it could have severe consequences for individual privacy. 

For example, a person’s movements could be tracked and monitored, revealing intimate details about their life, such as their political affiliations, religious beliefs, or personal relationships.

3) Bias and Discrimination

Since AI is only as good as the data it learns, it can also be trained biasedly.

One example of bias and discrimination related to AI can be found in the use of algorithmic decision-making systems in hiring processes.

Companies may use AI-powered tools to screen and evaluate job applicants, automating the initial stages of the recruitment process.

These tools can analyze candidates’ resumes, online profiles, and social media activity to determine their suitability for a particular job.

Systems like that can increase efficiency and reduce human bias in hiring. However, they can also inadvertently continue with existing biases, leading to discrimination if not designed carefully. 

Let’s say an AI system might be trained on historical hiring data, which may reflect past discriminatory practices or societal biases. 

This could result in the algorithm favoring specific candidates over others based on gender, race, or age rather than solely assessing their qualifications and skills.

4) Becoming Technology Junkies

I bet a growing number of people would get lost if their GPS navigation stopped working today, and this technology is not even AI.

Another example of dependence on technology, specifically in AI, can be illustrated through the growing reliance on AI-powered personal assistants, such as Amazon’s Alexa, Apple’s Siri, or Google Assistant.

These AI personal assistants have become integral to many people’s lives.

They help them manage their schedules, control smart home devices, provide news and weather updates, and entertain them with music or trivia.

Now imagine a scenario where a widespread internet outage occurs, rendering AI personal assistants non-functional. 

People who have become heavily reliant on these assistants for their daily routines might suddenly struggle to manage their lives without AI’s assistance. 

This could range from minor inconveniences, such as being unable to control smart home devices, to more significant issues, like missing essential appointments or failing to take medications on time.

And good luck with a fully automated toilet like this one in a scenario like that.

5) Misallocation of Resources

This risk or adverse effect is somewhat related to an economic context. 

As you may have noticed, the topic has attracted much attention lately. It will continue to do so (an arms race of AI technology is happening as we speak).

This can lead to many resources allocated to developing AI technology that may not be used for investments to solve other important social, environmental, and economic issues. 


how will ai affect real estate

16 Effects of AI On Real Estate

Now that we have a baseline of artificial intelligence’s general risks and benefits in various life areas let’s extrapolate them to the real estate industry.

11 Positive Effects on Real Estate  

In my articles about how AI is used in real estate and AI in real estate marketing, I already mentioned the positive effects of AI on real estate and real estate marketing. 

Since I am sure you are more interested in the negative ones, I will be brief with a bulleted list in this section and give you a short summary.

I was also more eager to analyze the negative effects which follow this section.

So here are the 11 positive effects on real estate I identified…

  • A better property search
  • More efficient real estate transactions
  • An improved risk assessment
  • Enhanced customer experience
  • Improved property management
  • Improved real estate lead generation (e.g., chatbots, audience analysis, AI-powered ad platforms, etc.)
  • Enhanced product (property) presentations (e.g. 3D virtual tours)
  • Faster property listing descriptions
  • Faster real estate video production and editing
  • Faster and more unbiased property valuations and market analysis
  • Better and more efficient property pricing

5 Negative Effects of AI On Real Estate

1) The Risk of Getting Replaced

I would say this is the biggest and most obvious one of all the potential negative effects or risks of AI on real estate. 

All the others that come after that pale in comparison, and you may feel the same. 

Due to the attention, this topic gets and even websites popping up monitoring the replacement risks for particular job types (e.g., this and this one), it is likely the public’s biggest concern.

So regarding real estate, AI-driven automation may lead to job losses in some areas, particularly for roles involving repetitive tasks or low-level decision-making. 

As I discussed in a recent article, one such area is likely real estate appraisals and property inspections.

Regarding property inspections, a real estate company could automate the process by deploying AI-powered drones and image recognition software. 

This technology could quickly and accurately capture property images, identify damages or maintenance issues, and generate inspection reports. 

As a result, the need for human property inspectors decreases, potentially leading to job displacement within that specific role.

2) Privacy Concerns (Smart Homes)

AI systems used in the real estate industry may collect and analyze large amounts of personal data, raising concerns about data privacy and the potential misuse of sensitive information.

For instance, this could happen when a smart home system collects detailed data on residents’ daily routines and habits. 

This would raise concerns about the potential misuse of this information by unauthorized parties or for targeted advertising purposes.

3) Biased Property Valuations, Mortgage Approvals, or Tenant Screenings

As I mentioned earlier, AI can amplify and continue with biases it learned about.

In real estate, this can mean unfair or discriminatory outcomes in property valuations, mortgage approvals, or tenant screenings.

For example, an AI-driven tenant screening system, trained on historical data that reflects societal biases, could inadvertently discriminate against certain applicants based on their race, age, or income, leading to unfair housing opportunities.

4) Dependence on Technology: Cyber Attac on Property Management Platform

If you rely too much on AI-driven systems in the real estate industry, you will have a larger problem once it gets “cyber-attacked.” In that case, you may experience system failures or loss of control over critical data and infrastructure.

Suppose you have a real estate company relying too much on an AI-powered property management platform to handle all aspects of your business. 

A cyber-attack on the platform could result in the loss of sensitive data and disrupts the company’s operations, leaving you vulnerable and struggling to recover. And I didn’t even mention the opportunity costs that come with it.

5) Ethical Dilemmas Regarding Smart Homes and Housing Affordability

AI in real estate can raise complex ethical questions related to surveillance technologies in smart homes, the use of personal data for targeted marketing, and the potential impact of AI-driven property investment on housing affordability and accessibility.

For example, an AI-driven property investment tool could identify low-income neighborhoods as prime targets for development, leading to widespread gentrification and displacing long-time residents who can no longer afford to live in their communities.

This issue can get complex pretty fast.



Let’s Take a Look In the Crystal Ball – Future Scenarios of How AI Will Affect Real Estate

As I did when I analyzed whether real estate agents will be replaced by AI, I will do the same here and work with future scenarios.

You want to remember that I am not a magician with a real crystal ball, and it’s challenging to predict the exact trajectory of AI in the real estate industry.

However, I will try to extrapolate three potential scenarios for the next five years based on the benefits and risks I discussed earlier. They are my speculations and can change anytime.


Scenario 1: Widespread AI Adoption in Real Estate (High Probability)

In this scenario, the real estate industry embraces AI technology, leading to increased efficiency, improved decision-making, and personalized customer experiences.

AI-driven property valuation, virtual tours, and property management have become standard practices, streamlining various aspects of the industry.

Regulatory frameworks and ethical guidelines are developed and enforced to address privacy concerns, bias, and discrimination issues.

Job displacement primarily affects roles involving repetitive tasks. Still, new job opportunities arise in AI development, data analysis, and technology integration. 

These displacements will also affect roles (e.g., real estate agents) that reject AI or don’t manage to integrate it into their workflows. 

These roles won’t be replaced by AI directly but by people and businesses who manage to integrate AI efficiently.

Scenario 2: Selective AI Adoption in Real Estate (Moderate Probability)

In this scenario, the real estate industry adopts AI technology in certain areas while maintaining traditional practices in others.

So AI-driven tools are used primarily for data analysis, property valuation, and personalization. Still, human expertise remains central to negotiation and complex decision-making.

The industry grapples with addressing privacy concerns and bias, leading to uneven implementation of AI technology and potential disparities in service quality.

Job displacement is limited as the industry balances using AI with the need for human expertise.

Scenario 3: Limited AI Adoption in Real Estate (Low Probability)

In this scenario, the real estate industry only slowly adopts AI technology, and traditional practices continue to dominate.

AI-driven tools are used on a limited scale for specific tasks such as property valuation and data analysis but have not yet been widely adopted for other applications.

Concerns about privacy, bias, and job displacement hinder the widespread implementation of AI technology, leading to slow progress in addressing these issues.

Job displacement is minimal, but the industry may lag behind other sectors regarding technological advancements and efficiency gains.

To sum it up, the real estate industry’s relationship with AI will likely evolve over the next five years. 

The most likely scenario is widespread and selective AI adoption. 

The extent of AI integration will depend on the industry’s ability to address the associated risks and challenges while maximizing the potential benefits of this transformative technology.

This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.

Tobias Schnellbacher