Episode summary
The Federal Reserve makes AI a housing problem
HousingWire Daily
· · 17 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argues that housing has an AI problem because the Federal Reserve is treating AI-driven investment as inflationary, which can keep policy tighter for longer and leave mortgage rates higher than they otherwise would be. He says the hawks at the Fed are pointing to AI spending, data-center construction, and the related surge in electricity demand as reasons inflation may stay sticky rather than fade quickly.
The discussion ties that Fed stance directly to housing. Logan says he structurally believes 65% to 75% of where the 10-year yield and mortgage rates go is driven by Fed policy, so if policymakers stay hawkish because of AI, housing feels the impact even if AI is helping growth elsewhere. He adds that the economy is absorbing labor and capital into data centers while single-family starts and permits are down and apartment growth is weak.
The host pushes on the irony that AI is supposed to be disruptive, yet it is also being used broadly across housing and finance. Logan says the bigger issue is that AI may eventually improve productivity, but for now it is still adding money and investment into the economy, and that makes it inflationary in the near term. He also argues the backlash is only growing as local communities, governors, and politicians push back on data centers and the politics around inflation intensify.
Key takeaways
- Logan Mohtashami says the Fed is using AI investment as a reason to stay hawkish, making AI a direct housing problem.
- He says 65% to 75% of the 10-year yield and mortgage-rate direction comes from Fed policy, so housing is sensitive to the Fed’s AI view.
- Logan argues AI spending is inflationary for now because it pulls labor and capital into data centers instead of easing price pressure.
- The host notes the industry is already using AI widely, even as communities and governors push back on data-center expansion.
- Logan says mortgage rates have mostly lived between 6% and 6.85% this year, and AI-related pressure is part of why they have not broken lower.
Notable quotes
“the Federal Reserve went from two to three rate hikes or cuts to two to three rate hikes, and the hawks are all making AI the big variable here”
“I always structurally believe 65 to 75% of where the 10-year yield and mortgage rates go Fed policy”
“the Federal Reserve says policy is not restrictive for the general economy because AI is is helping growth and investment. It is restrictive for the housing market”
“where is the labor going to? It's going to data uh uh centers. Uh, so that's kept the employment data”
“if the Federal Reserve is telling we need to keep rates or we need to hike rates because of AI, then yeah, then it's it's an issue”
How the episode opens
Welcome everyone. I'm joined today by my podcast partner, lead analyst Logan Modos Shami to talk about housing's AI problem. It's going to be a great discussion, but first, let's look at the top five trending stories on housingwire.com.
At the top is why the 2026 mortgage layoff cycle looks different, followed by Logan's article we're discussing today, does housing have an AI problem? Then we have our AI summit playbook from last week's event and is Zillow having its AOL moment. Finally, we have Toll Brothers Luxury Mo meets a tougher market test.
Okay, we're ready to go. Logan, welcome back to the podcast.
It is wonderful to be here. Um what a crazy week on the AI front. Uh as I've seen uh governors in both red and blue states putting moratoriums on data centers and surveys are just everyone hates data centers now.
And it's almost midterms and we always talk about two-year political cycles here in America. So there's limits to what you think you can get away with without, you know, uh people fighting back. And uh uh I was asked this question, you know, you know, is housing being impacted by the AI boom?
And so I thought, you know, we wrote that article on on Friday, but I thought you and I could just address this. Uh does housing have an AI problem as well?
No, I think it's it was such a good article. Um and it follows so our newsroom has done a series of articles on how the AI data centers are impacting people in our industry really looking at it from first of all like if you're a real estate agent how are you dealing with like what it might mean if you have a bunch of data centers around how do you advise your clients we talked to appraisers about does that change you know the value of the houses around it or does it make it go up because of that we've talked um on the builder daily we published um an article about the land use and is, you know, it's really squeezing home builders, some home builders.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai in housing
- federal reserve
- housing affordability
- mortgage industry
- housing technology
Watch the episode
Watch “The Federal Reserve makes AI a housing problem” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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