Last month I posted a video arguing Seattle home prices would fall 35%. That was too pessimistic. Today I want to discuss potential tailwinds for home prices.
A quick recap: the primary driver of potential price declines in Seattle and the US was mass tech layoffs and the coming disappearance of white-collar jobs. According to Anthropic's March 5 forecast report, 50% of junior white-collar jobs will disappear within 5 years.
Following that logic, home prices should crash — white-collar workers are the primary buyer pool. But one critical factor gets overlooked: governments will act.
If unemployment hits 10%, that's an economic problem. If 50% of white-collar workers are unemployed, that's a social stability problem. And governments must respond to social stability problems.
Elon Musk has repeatedly mentioned that the ultimate solution to AI-driven productivity surplus is Universal High Income (UHI) — not just basic living stipends, but genuinely high income even for people who don't work.
I'd analyze UHI from three higher-level dimensions rather than just welfare:
First: UHI as a total demand stabilizer. When AI replaces mass white-collar jobs, total social income falls, consumption declines, deflation sets in. Modern economies fear deflation more than inflation. Governments must support the demand side. UHI forces everyone's purchasing power above a floor.
Second: UHI as a political stability tool. The people being AI-replaced aren't a marginalized group — they're taxpayers and voters. Once their income becomes unstable, governments will respond quickly.
Third: UHI as an AI dividend redistribution mechanism. MIT economist and AI economics authority Daron Acemoglu argues that AI gains will concentrate among a small oligarchy, and the only way to change this is government intervention — taxing AI giants and redistributing through UHI.
The key question: will UHI cause inflation? Current mainstream academic thinking is that mass consumer goods won't inflate (AI drives efficiency and cost reduction), but scarce assets will. When everyone has more money, demand for scarce resources increases while supply stays fixed — values rise.
Scarce assets: land, school districts, medical resources, energy, electrical grids, computing capacity. More money chasing fewer assets.
This isn't speculation — we tested it at small scale during COVID. The US distributed an average of $3,200 per person, causing home prices to rise 40% and equities 120% in two years. If every person received $3,200 per month indefinitely, you can extrapolate the outcome.
There's also political amplification: once one presidential candidate campaigns on UHI, they gain massive voter support, forcing the other party to offer even higher income guarantees. Both parties bidding up, voters benefit.
But this utopian vision has a real trap: guaranteed income may lock in social class. In the past, an ambitious person from a small town could use education, hard work, and talent to cross class lines through employment. In the future, when there are no jobs, the path for upward mobility disappears.
For your own property decision: the key question is whether your home is an asset or a liability. Over the next 3-5 years — the critical AI implementation window — are you entering the UHI era with assets or liabilities?
If your home has positive monthly cash flow, it's an asset helping you build wealth before UHI arrives. If it has negative monthly cash flow, it's a liability consuming cash, making you poorer before UHI arrives.
Summary: AI will cause mass white-collar unemployment, governments will intervene — one mechanism being UHI. UHI will drive up scarce asset values, including home prices. But this isn't 100% certain: if government spending exceeds AI productivity gains, broad inflation follows, the Fed raises rates, and prices fall. And with 3D-printed construction and maturing modular technology, homes may not remain scarce assets in the future.
