AI Bubble: The Surprising Way Your Home Could Be Impacted If It Bursts
Written by
Sarah Li Cain
Edited by
Rebekah Evans
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Artificial intelligence (AI) may feel like it just involves funny ChatGPT prompts or struggling with customer service chatbots, but behind the scenes may be far more serious — and expensive.
The fast buildout of AI data centers across the U.S. is straining local power grids, in ways that many households don’t even know or have seen yet. And if the AI bubble were to burst, the fallout could affect your housing costs, from your utility bills to your home’s value — find out more below.
AI’s Huge Energy Appetite
You may already know that AI-related tools need huge amounts of computational power, which means that it requires a lot of energy. In fact, data centers can run tens of thousands of GPUs (graphics processing units) 24/7 and need to be cooled constantly to remain functional.
This means that the infrastructure needed to support these tools are far beyond what traditional commercial development can handle. We’re talking about upgrading transmission lines, high voltage needs and large substations.
According to Reuters, Oracle has taken on massive amounts of debt in order to expand their AI capabilities and reliance on OpenAI. So much so that investors are concerned about the sheer scale and whether their plans are sustainable.
Since this surge in construction needs a lot of specialized grid access and energy, it adds a different kind of pressure on local utility companies that are already struggling to handle the increased demand.
Higher Utility Bills and Inflation Pressure
Utility companies typically recover costs for needing to expand their capacity quickly by raising rates across their service area.
What does this mean? When there is more demand for power than the grid can realistically supply, somebody will need to pay for those upgrades. Sure, companies may do it, but it’ll mostly likely fall on the taxpayers to subsidize the electrical needs of AI companies.
According to The Scotsman Guide, AI’s increased energy needs could make homeownership more expensive. As in, it could add pressure that could affect how homeowners or would-be homeowners afford their mortgage payments. This doesn’t include other related costs like utility bills.
In other words, when there are higher energy bills, it will eat into your budget and how and where you’ll move. For those with mortgages at low interest rates, Realtor reported, there isn’t much incentive to move, especially if these homeowners will face rates at least 4% higher than what they’ve got now.
That leaves new homebuyers with lower homes to choose from. What’s more, areas that are experiencing AI-driven development could see some changes in home values. House Beautiful reported that research shows that homes near data centers have sold for more because of increased demand for tech workers to move close by. Plus, it could also stem from the infrastructure these data centers bring.
And with higher home prices, many are still shut out from the path to homeownership.
But even if you’re “stuck” renting, it could still mean you’re paying higher energy prices.
What Happens If the AI Bubble Bursts?
The unfortunate news is that if the AI bubble were to burst, there may not be much relief. If utility companies have already invested billions of dollars on grid upgrades based on future demand, the customers may still have to pay for them.
And if AI-related projects freeze or employers pull back, the temporary boost to the local economy could stop. It may even cool demand on housing, leaving sellers with a home that may not sell as fast or for as high as before. Homes may still not be as affordable for buyers.
We can’t predict the future, so it’s hard to tell what will happen if and when the bubble bursts. What you can do right now is to monitor your energy consumption and prepare your budget as well as you can to see whether costs are indeed going up.
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