This Mammoth Real Estate Q&A appears in the Presidents’ Weekend 2023 issue of The Sheet.
Q: With the evolution of ChatGPT type software have you thought about using it to write your columns? Or how long do you think before Jack Lunch can replace you with some sort of artificial type intelligence? And when do you think your clients will be able to replace you with AI?
A: This is actually fun to ponder, and to answer. If I was a younger real estate agent/broker I might be very concerned about some sort of artificial intelligence replacing me in the future. But next month I hit official retirement age, and I’ll probably ride the business out until AI does in fact replace me. Or when my clients think there is something better. Hopefully that is within the next 10 years. And no, I won’t be using artificial intelligence to write columns or newsletters any time soon. This work helps keep my brain functioning.
I do think that at some point there will be real estate consumers (buyer and sellers) who will rely heavily on some sort of AI for their decisions. In many ways they already do. It is called Zillow. But the demise of Zillow’s iBuying program is proof that their own AI wasn’t giving them good advice. It was all based on the rearview mirror. And maybe even worse, in 2023 Zillow intends to rely on their mortgage division to prop up their revenue and earnings — just as the mortgage industry is crashing due to diminished business and vanishing profits. Zillow is almost proving to be artificial un-intelligence. But it does remain a good resource of information.
In my early observations of an AI program like ChatGPT, one of the things it can’t apply to the real estate market is the current and ever changing conditions. At least not yet. Looking backward at data is easy. And predicting the future is laughable, especially at this point. Don’t expect this to change. Just look at how the real estate market changed from the spring of 2020 to later that year, and into 2021. Who could have predicted that? It went from dire straights to sales pandemonium. We were all just along for the ride. The current market stagnation is a completely different and changing condition.
To have a real grasp on the market is a daily assessment of what buyers and sellers are thinking and saying. And the most basic things can have significant impact. Some for the good, and some for the bad. How does an AI program know this (well, until everyone has a chip in their head)? In the Mammoth market, something like great snow conditions can be profound. Buyers can easily “lose their minds” simply based on exhilarating on-hill experiences. On the flip side, big winters can create exhausted owners and sellers who are motivated to move on. I’ve seen it many times over the decades. How will AI have a pulse on the market? Where will the inputs come from?
Occasionally something fickle can tarnish market conditions too. There is an interesting example in the local market right now. While the available inventory of homes and condos is currently quite low, one-third of the condo inventory are properties at the Westin Monache. This is a huge imbalance. The project has recently completed the major “refresh” remodeling of the unit interiors and hallways. It was long overdue and the units look great. Occupancy rates are back up to pre-pandemic levels including the almost astonishingly high occupancy levels in the Studio units. The room rates (ADR) are also up since the units have been modernized. Rental demand is high. Alterra is even branding the facility the “Mammoth Mountain Hotel” on their website. So everything should be great, right?
But the market conditions have motivated an inordinate amount of Westin owners to put their properties up for sale. This could be coincidence, but I sense some level of owner dissatisfaction (and no bot has yet to tell me why). There have been some operational and personnel changes, but that is rather normal in Mammoth. Some owners aren’t entirely satisfied with the remodeling, especially the cost. There is a current special assessment for insurance, a situation that is plaguing real estate owners all over California. But none of this is cause for a rush to the exits.
This is the kind of micro market condition that is interesting to watch. This inventory could start competing with each other and a truly motivated seller may slash their asking price, or price expectation, and perhaps an attractive buy could be made. Or not. The properties are producing solid revenue, why is there any hurry to sell? But how would AI know any of this??
There’s another little notable market condition that hit me last week; there have been no true ski-in ski-out condos on the market in quite a while. And not even ones that are within close walking distance to a lift. Interesting. An opportunistic seller might be able to get a substantial premium for one right now, especially with the current, great snow conditions. But the snow eventually melts and that specific demand could go with it. The market is always changing. Does ChatGPT know this?
One of the most interesting things about all of this future AI technology is that it is going to make it harder for everybody to tell the real from the fake. Like multiple layers of fake news on top of phony visual and audio representations. Lots of people are already having difficulty (myself included). We are all going to be duped a little easier in the future (so maybe there is a future for timeshares in Mammoth?). Eventually all of this should make people even more cautious, especially with things like major purchases and investments (or maybe their health?).
There are so many other things that make up the Mammoth real estate market that AI is pressed to know. Right now is classic period. Does it know how much roof shovelers have been making the last few weeks? Or the truckers? All as a result of a glorious but rather burdensome storm cycle. This has, or will, impact most property owners. Especially right in their pocket books. Or is your ring doorbell or AIexa going to check on your ice dams? Ultimately, how is AI going to know what buyers and sellers are experiencing, and how any of this will impact the market?
What does this mean for real estate? Who really knows. We already have Photoshop and virtual staging. I already hear complaints from people who say “it looked great in the pictures, but it is a dump.” During this last sales cycle we had plenty of buyers purchasing without actually “standing in the property.” How many didn’t get what they thought they were getting? AI could make it worse. Facetiming or videoing fictitious properties could be a great scam. And of course the buyer should waive the inspection because the property is in such great shape.
People who are spending time with ChatGPT are already reporting on the inherent bias in the system. Great, so it is just a more sophisticated used car salesman type application? It reminds me of one long-time local agent’s voicemail greeting, “It’s a great time to buy or sell real estate in Mammoth Lakes.” The question is; How can you tell? ChatGPT just might have you begging for another canned real estate newsletter on decluttering your house. Between the fake and phony, and the bias, the consumer could will become really confused. And trust me, Zillow already does this to many people. There is a reason it is called real estate.
And let’s not forget that the real estate brokerage business is based on not only knowledge, but salesmanship and service. Just imagine a future of being bombarded with some automated and obnoxious sales rhetoric persistently convincing you to buy. Buy anything, buy everything. It will probably be coming from your phone soon enough. They are already following all of your searches.
The real estate industry is already promoting ChatGPT to agents to help them write their remarks for their MLS listings — the specific property marketing description that populates to all of the websites like Zillow and Realtor.com. This may be a godsend for agents who have trouble stringing together a few sentences of coherent language. But the end result is bound to become almost comical. Who knows what may show up in these remarks? Maybe the neighbor that has a criminal record or some bizarre social media presence? Or the average time to get a Dominos pizza delivered? Or…? I think I will continue to do it the old fashioned way. There are actually people who read this stuff looking for discriminatory language. Like using the term “great family home.” The real estate industry wonks love tech and they are sure to input AI into all aspects of the industry. This should be fun. The more you’ll know, the less you will understand.
And I’m sure there are people who already believe ChatGPT is the new authority on everything. I do look forward to the evolution of it all (maybe). For me it will be intriguing to see how AI will handle the subject of Mammoth real estate and what will flow out of it. It will no doubt be crawling all over the content of my blog site as well as conglomerating information from local websites, Airbnb, VRBO, AirDNA, and on and on. It will be interesting to see what it does with my bias. And at some point it might even be fun to propagate some of my own fake news. I think that will only be fair.
As for Jack Lunch, he can replace me at any time. I wrote my first real estate column for that other Mammoth newspaper when I was 30 years old. Maybe that’s long enough. Maybe the real estate consumer of today would rather hear from a bot.
Happy Presidents’ Weekend and Ski Week!