“People are so outmoded. It wouldn’t surprise me if they stopped making them.”
I was recently on a cruise and during one rainy afternoon found myself in my cabin watching an old Katherine Hepburn and Spencer Tracy movie, Desk Set. The romantic comedy was filmed in 1957, one year after I was born. Ironically, the screenplay was written by Henry Ephron, the father of Nora Ephron the screenwriter for such modern-day romantic comedies as Sleepless in Seattle and When Harry Met Sally, among others.
I did a double take when I realized the backdrop for Desk Set was machine learning. That’s right, 1957.
The IBM super computer, EMERAC (Electro-Magnetic Memory and Research Arithmetical Calculator) was about to be deployed to replace the ladies in the research department of FBA (The Federal Broadcasting Company). The research department was part Snopes, part Google Search, equal parts Siri and delivered with wit and charm by a small group of bright women led by Miss Watson (Katherine Hepburn). One has to wonder was the real-life IBM artificial intelligence engine dubbed “Watson”, a “tip of the hat” to Hepburn’s character?
Spencer Tracy plays a methods engineer employed to improve the man-hour relationship with his EMERAC machine. The drama unfolds as a symbiotic relationship emerges between man/woman and machine. In our modern world of “big data” it will be the appraisers within our real estate universe who provide the context to the data. The worries that a machine will replace appraisers has been around for several decades.
Theoretically, artificial intelligence to estimate real estate values is quite plausible. The AVMs of today, however, are not truly valuation models at all. They are sales price forecasts. The lack of recognition by the modelers that price is not a substitute for value is a fatal flaw. The context of seller concessions, motivations of buyer and seller, both parties being well informed, adequate exposure to the market and in terms of cash or equivalent cannot be determined by a machine.
I wouldn’t be too worried yet about the efficacy of the models or the integrity of the data replacing your local market expertise. I would, however, take notice of the politics of it all.
I’ll leave you here with a few lines from the script.
Hepburn: Wait a minute. I thought you said this machine can’t evaluate.
Tracy: It can’t. It can’t. It can only repeat the information that has been fed into it by the human element. EMERAC was never intended to take over. It was never intended to replace you. It’s here to free your time for research. It’s here to help.