Shaping the Future of Real Estate: Navigating the New Frontier of AI Governance and Innovation

Apr 02, 2024

By Vin Vomero, CEO FoxyAI

The recent announcement by Vice President Kamala Harris with new requirements for how federal agencies use AI technology marks a significant advancement in the United States’ approach to artificial intelligence (AI) governance. This development, led by the White House Office of Management and Budget (OMB), introduces the government’s first comprehensive policy aimed at mitigating AI risks, mainly to prevent AI from being used in discriminatory ways, while maximizing its benefits. This policy encompasses a wide range of directives aimed at enhancing AI safety, privacy, equity, and innovation across federal agencies.

The policy, which goes into effect on December 1, 2024, could have profound implications for the real estate sector and Government-Sponsored Enterprises (GSEs). Here’s a breakdown of some potential impacts I foresee:

Enhancing Fairness and Equity in Real Estate

The OMB policy mandates rigorous testing, monitoring, and transparency of AI applications to mitigate risks of algorithmic discrimination. This is particularly relevant for real estate entities and the GSEs, where AI models are increasingly employed for appraisals, credit scoring, and mortgage lending. By adopting these safeguards, agencies and companies within the housing market can ensure more equitable treatment of individuals, regardless of their background. This is intended to reduce biases that have historically affected marginalized communities in housing and lending practices.

Encouraging Responsible Innovation and Competition

The guidance emphasizes removing unnecessary barriers to innovation, urging federal agencies to experiment responsibly with AI. For proptech companies, this can encourage the development of new and innovative AI models that address key challenges in real estate, such as property valuation, market analysis, and predictive maintenance. The focus on fair competition and data protection in AI procurement processes also suggests a healthier, more transparent marketplace for AI solutions in real estate.

Strengthening Transparency and Public Trust

By requiring federal agencies to release detailed inventories of AI use cases and ensuring public notification of AI systems exempted from compliance, the policy aims to bolster public trust in AI technologies. Of course, as we all know, the rapid adoption and commercialization of emerging technologies carry inherent risks, especially as regulation evolves, and from historical precedents, it’s nearly impossible to identify all use cases of a brand new technology initially. For the real estate industry, adopting similar practices of transparency could enhance trust among all parties involved. GSEs, known for their significant influence on the housing market, might also adopt more transparent AI practices, thereby setting a high standard for the entire industry.

Building AI Talent within the Government and Beyond

The commitment to hiring 100 AI professionals and expanding AI training programs reflects an acknowledgment of the crucial role of human expertise in guiding AI development and governance. For the real estate sector and GSEs, there’s a clear message about the importance of investing in AI talent. This should lead to more skilled professionals working on AI solutions tailored to real estate, enhancing both the effectiveness and ethical standards of these technologies.

Concluding Thoughts

The OMB’s policy represents a pivotal step towards responsible AI governance, with implications extending far beyond federal agencies. For the real estate sector and GSEs, it provides both a blueprint and a mandate for incorporating AI in a safe, equitable, and transparent manner. As real estate companies navigate the evolving AI landscape, aligning with these federal guidelines could mitigate risks and unlock new opportunities for innovation and growth. This alignment ensures that the future of real estate technology is built on a foundation of trust, fairness, and responsibility, aligning with broader societal goals and regulations. However, as with all regulatory actions, the implementation of regulations must ensure that the goals of the regulation are not hampered or lost, and that commercial activities are over-encumbered.