Why AI-Generated Home Photos Leave Us Feeling Unsettled

Nearly 70% of real estate agents now use AI tools. So why are homebuyers walking away feeling disappointed?

Kati Spaniak, an Illinois-based real estate agent, initially thought AI-generated listing photos were a brilliant idea. Like any commission-based professional, she's under constant pressure to cut overhead costs. A tool that could furnish an empty home digitally—without the expense of actual staging—seemed like a game-changer.

The Promise vs. The Reality

Spaniak found what seemed like the perfect test case: a house north of Chicago that looked great on paper but terrible in photos when empty. She ordered "virtually staged" images, complete with AI-generated furniture, wall hangings, and coffee table books. The results looked impressive online.

But when potential buyers started showing up, something was off. Visitors seemed disappointed, even disoriented. "They don't even really recognize why they're upset," Spaniak observed. "They just feel let down."

This isn't just about misleading photos—real estate has always involved some level of manipulation. Wide-angle lenses make spaces appear larger, cookie-scented sprays suggest cozy homemakers, and strategically half-filled closets imply abundant storage. The difference is that buyers typically accept these subtle nudges because they're being guided toward something they already desire.

Selling Dreams, Not Square Footage

Successful brokers understand that homes aren't sold on facts like square footage or bedroom counts. They're sold on feelings—FOMO ("This one will go fast"), security ("You wouldn't even need to lock your doors"), and aspiration. Empty homes are carefully staged to help buyers project themselves into roles: the family-oriented homeowner in a suburban bungalow, the urban sophisticate in a downtown loft.

"Your whole goal when you're selling a house is to get people in the door feeling emotional," Spaniak explained, "like they're going to raise their families there."

From this perspective, the unnameable distress caused by data center-fabricated images isn't just about superficial deception—it's about the psychological function of home and the dreams buyers carry when house hunting.

The Uncanny Valley of Real Estate

The most flagrant AI real estate imagery—hallucinated trees, staircases leading nowhere—might violate false advertising laws. But AI photos exist on a spectrum of realism. Some are cartoonishly fake, others nearly lifelike. In Spaniak's listing, furniture hovers slightly above floors, and fabric drapes as if immune to gravity. A casual browser on their phone might miss these nuances, but something feels wrong.

Psychologists have observed that AI-generated human images fall into the "uncanny valley"—almost-but-not-quite-realistic images that are far more unsettling than, say, a Charlie Brown cartoon. Research from Indiana University and the University of Duisburg-Essen found people are similarly creeped out by AI food images. Real estate photos seem to trigger the same response.

Interestingly, "uncanny" comes from Freud's "unheimlich"—literally meaning "un-homely." The opposite of comfort, security, and safety. Trying to sell living spaces using technology that makes people feel un-homely creates an obvious problem.

The Aspiration Economy Under Threat

Homes are luxury goods in the truest sense—their value is based mostly on intangibles. The pride and coziness one feels has little to do with the shelter provided by roof and walls, just as people don't wear Jordans for ankle support. As architectural historian Paul Oliver noted, home is "the theatre of our lives."

But aspirations are fragile. Psychologists consistently find that ambitions motivate us in proportion to their attainability. AI listing photos risk calibrating human desire to what doesn't exist—and what does exist can only disappoint.

Traditional real estate manipulation, however heavy-handed, still reflects some grain of truth. That apartment really does look magical at golden hour, even if only for 20 minutes daily. Your home could be as sophisticated as the professional stager made it appear, if you found a spare $180,000 for Danish furniture and framed Twombly prints. You won't, but you could.

Market Reality Check

Many agents seem to instinctively understand this challenge. Despite AI-generated photos gaining traction, the agents interviewed believe the practice is unlikely to scale widely. After her experience, Spaniak now recommends real-life staging and professional photography. Other agents suggest only amateurs would cut corners with AI photos.

If the industry insists on shoehorning this technology into listings, it will likely make buying and selling less efficient and profitable, according to Ayelet Fishbach, a professor of behavioral science and marketing at the University of Chicago: "Both buyers and sellers lose."

Timing Is Everything

Philosopher Ernst Bloch once observed that the uncanny had its pleasures, but creepy entertainment was best enjoyed in "too cozy" conditions—when one felt personally secure. People crave the disconcerting when they're comfortable.

If AI photos had hit the market during the socially placid, economically flush '90s, they might have exuded a more utopian aura—more Jetsons than Terminator. Instead, they're spreading when many Americans are financially strained, alienated, and pessimistic about the future. Ironically, some contemporary anxieties stem from AI itself, including threats to critical thinking and white-collar jobs.