Australian real estate developer Emil Juresic is selling his Brisbane mansion due to fears AI will crash the global market. (Source: NGU Real Estate)
“This is going to sound stupid,” Australian property mogul Emil Juresic announced publicly not long ago.
The Queensland-based developer went on to reveal that he’s selling off all of his personal property holdings, including his $25-million mansion, due to fears that artificial intelligence could crash the global real estate market in the short term. Juresic, founder of NGU Real Estate, is worried that high unemployment will result from AI replacing jobs, followed by a recession, a reduction in buying and borrowing power and plunging property values.
He believes he’ll be able to buy everything back “for half the price in two years time.”
Juresic has also said that AI “super agents” will be much cheaper and more efficient than traditional salespeople. This hasn’t gone over well in the industry.
“AI cannot replace the human element,” argues Kim Fairley, president of the Ontario Real Estate Association.
Juresic is aware that many people think he’s unhinged. “There’s a lot of dinosaurs” out there sleeping, in his view. He acknowledges being excited by AI’s capabilities but also frightened.
We are heading into uncharted waters.
Early warning envoy?
Is it possible Juresic might be the Laura Secord of the artificial intelligence revolution, an early warning envoy? Could he be onto something?
He isn’t alone in his views around AI being a significant market disruptor, replacing labour to a degree that, at least initially, compromises our consumer-driven economy. There are some powerful voices with similar opinions. Among these is rebel American investor Michael Burry, the legendary financier famous for predicting and profiting from the 2008 subprime mortgage meltdown, immortalized in the movie The Big Short.
Burry is betting on AI being an epic speculative bubble that will tank the market, a belief that’s intensely debated among investors. In his assessment, AI-related investments are currently vastly overvalued and have led to unsustainable investment and artificial profit inflation. He anticipates a severe correction. Earlier this year he warned that the financial situation created by AI speculation would be “too big to save,” even with government intervention.
Burry, a brilliant contrarian analyst, has been dubbed the “Cassandra of Wall Street,” known for making accurate and often ignored predictions about upcoming market disasters. Some of his forecasts have been off the mark, or at least premature. One theory holds that in this particular case, his projection regarding AI may be early, rather than wrong.
‘Too new to know’
Time will tell. This is all so new that it “may have repercussions we haven’t yet thought of,” observes Faith Wilson, a broker with Christie’s International Real Estate in Vancouver. “Potential job losses may be absorbed in other ways.”
The Canadian Real Estate Association says it is unaware of any data at this time that supports or rejects the conclusion that massive job losses due to AI could result in crashing real estate values.
AI real estate experts are thin on the ground at this early stage. Among those here in Canada is Carrie Soave, an eXp agent and AI coach based in Hamilton, Ont.
And she’s not buying what Burry and Juresic have to say.
“Burry made his name calling one crash. I have respect for that, but making one right call doesn’t make every call right,” she says. “What AI actually does is redistribute wealth. The people who build with it will have more buying power, not less. The people who ignore it are screwed. That’s not a housing crash — that’s economic natural selection.”
Certainly, some markets will soften and jobs will be lost, she concurs. But the idea that the property market will plunge within a couple of years due to AI-driven unemployment “ignores the fact that the housing supply is still constrained.”
‘Betting against the people who refuse to adapt’
Friction in the job market is inevitable. “But AI also creates entirely new categories of income for people who actually learn how to use it,” Soave notes. “Burry is betting against the asset. I’m betting against the people who refuse to adapt.”
That includes real estate agents. Soave is adamant that agents who aren’t afraid of AI and “are using it to become irreplaceable” will dominate the market.
Like many, she envisions AI reshaping the industry rather than sending it into a nosedive.
While not writing off the prospect of turbulence, Remax Canada president Don Kottick is guardedly hopeful.
“As with most economic shifts, the impact is likely to be uneven across regions and industries,” he says. “Real estate is fundamentally tied to employment confidence and income stability, so any widespread disruption to the labour market could have downstream effects on buyer activity. At the same time, innovation-driven growth in AI and related sectors may create new pockets of demand and opportunity.”
Susan Doran is a Toronto-based freelance writer who has been contributing to REM since its very first issue.