Are You Comfortable with AI Assisted Listings?

Almost every afternoon you’ll find me at the neighborhood park with my golden retriever Holly.  We have a regular group of people that come together to let the dogs socialize while us parents discuss or disagree about the news of the day.  One parent mentioned that a home in the neighborhood just went up for sale, but they did know any of the specifics.  I grabbed my smartphone (the kids of today have no idea how life changing instant information has revolutionized things) to check out the MLS listing for the property.  It’s no surprise in my business that I review a lot of MLS listings.  But this was the first time I saw this disclaimer in the description section of the listing:

 

A few photos have been virtually staged (enhanced).

 

The home in the listing is currently vacant, not only by its residents, but there’s no furniture either.  When a seller moves out and leaves the place empty, studies have shown that buyers have difficulty envisioning how the home would like furnished.  Those studies show that furnished homes sell faster and for higher prices than empty homes.

 

That’s where “staging” comes into play.

 

Most homebuyers are unaware when they walk into a furnished home for sale that in many cases the furniture you see; tables, couches, beds, artwork, plants, and sectional rugs, are not the belongings of the seller.  To make sure the home sells for top dollar, agents that list empty homes will often employ the services of a staging company.  These quasi-rental-moving companies bring in everything to make the home look like home.  Staging is what movie, TV, and theater “stage” productions (and where the term came from) to create sets.  Staging is expensive.  The average staging costs about $5,000 for a typical home.  Luxury homes can cost $15,000 easily.  The typical staging contract is to keep the furniture in place for 45 days.  The cost for staging is almost always paid by the listing agent.

 

Now with the power of AI and some skill, one can use a computer to fill an empty room with furniture.  The cost saving is obvious.  The images are quite dramatic:

 

 

 

 

 

As I shared the photos with my fellow dog parents, lots of questions came up.  Is this legal?  One asked, I wonder what else they manipulated?

 

One doggie parent is a licensed real estate agent and confirmed that AI enhanced photos are allowed, so long as it’s disclosed.  But she went on to say she’d never use them.  Her concern is what happens when the potential buyers come to the listing and see the place empty.  I suggested showing them the AI-enhanced photos again.  But that was met with skepticism.

 

What are your thoughts?  Is the modern way to “show” a home too futuristic for you?  Do you expect to see actual “real” rented pretend furniture when you visit your potential new home?  Would seeing a photo of a furnished home online, then seeing it empty in person, alter your desire to buy that home?  I’ve always believed that sellers clutter their homes with too much accumulated stuff.  It makes your home look smaller inside than it really is.  I would think the opposite would be true.  Seeing a reasonably furnished home online, then seeing it in person empty, would make you think the inside is bigger than it actually is.

 

You can guess my thoughts on AI-enhanced listings, but I would love to hear from you.  Don’t go with your gut, think about this one.  Would seeing the empty home after looking at pictures of the place furnished alter your thoughts on the property?  Inquiring minds would like to know.

 

 

 

 

 

 

 

And now the week’s economic news…….

 

Inflation Rises Slightly

Despite higher than expected inflation data, investors were more focused this week on hints of weakening in the economy.  In particular, consumer confidence badly missed the mark.  As a result, mortgage rates ended the week a little lower.

 

Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator.  In May, Core PCE was 2.7% higher than a year ago, up from an annual rate of increase of 2.6% last month, and slightly above the consensus forecast.  Progress toward the 2.0% target of the Fed has not been easy, and this desired level has not been achieved since February 2021.  The big question for some remains: how large an impact higher tariffs will have on future inflation levels.

The latest report on consumer confidence published by the Conference Board revealed that consumers remain concerned about the impact of higher tariffs.  The index dropped sharply in June to 93, far below the consensus forecast of 99, and the decline was seen across nearly all age and income groups.  In particular, the outlook for the labor market weakened.  The share of consumers viewing jobs as plentiful was the smallest since March 2021, and the number expecting their incomes to increase over the next six months was lower.

 

 

 

 

 

 

 

 

 

In May, sales of existing homes unexpectedly rose slightly from April, but still were at the slowest pace for May since 2009.  The median existing-home price of $422,800 was up a slim 1% from last year at this time, but at a record for the month of May.  Inventories remain stuck at historically low levels, standing at just a 4.6-month supply nationally.  However, this was the largest level in five years, and inventories were over 20% higher than a year ago.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of new homes displayed much worse performance in May, falling 14% from April, far more than the consensus forecast.  The median new-home price of $426,600 was up 3% from last year at this time.  The supply of new homes remains near the highest level since 2009.  In contrast to existing home sales, which measure actual closing during the month, new home sales are based on contracts signed, making them a leading indicator of future housing market activity.

 

 

 

 

 

 

 

 

 

 

 

 

Next Week

Investors will continue to look for additional information about tariff policies and monitor the situation in the Middle East.  For economic reports, the ISM national manufacturing sector index will be released on Tuesday and the services sector index on Thursday.  The key Employment report also will be released on Thursday, and these figures on the number of jobs, the unemployment rate, and wage inflation are always closely watched.  Mortgage markets will be closed on July Fourth.

 

 

 

 

 

Until next week….

 

*** Please note that Freddie Mac publishes their weekly rate report on Wednesday mornings from data received Monday and Tuesday. 

The graph above is intended to shown rate trends, and not “today’s current rate”. ***

 

 

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https://youtu.be/c7AKQ5wa2_U

 

 

 

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https://youtu.be/iH3igW5v2jE