Massive Housing Disruptions: Changing The Face Of Real Estate?

As always, I suggest looking at technology to see where things are going.

Many talk about disruption, but do we really know what causes it? When we see it taking place, are we aware of it? What type of industries are ripe for disruption?

To start, the first element that is necessary is that the industry have a lot of money involved. If not, innovation and experimentation simply does not make sense.

Another is the fact that the industry did not change in decades. In some cases, we see things being done that go back 100 years or more.

Both of these factors are present in the construction industry and housing market.

So time back I wrote an article about the possibility of real estate prices dropping 90% in some areas. Many find this to be impossible.

Simply put, understanding technological trends not only makes it possible, but also likely.

The second something gets digitized, it entered a completely different world. Instead of being stagnant, the trend is for massive demonetization. Technology tends to speed up over time, gaining more capabilities, and reducing costs.

This is a point we are entering within the construction industry.

In the past, I wrote about 3D printing in the construction industry. One such project that was highlighted is now making a great deal of progress.

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A 3-story apartment building is now under construction in Germany. It is going to be a 5 unit complex, totally over 4,000 square feet. The printing is expected to take 6 weeks to complete with the entire project completed next March or April.

The advantage to 3D printing is speed, cost, and time. Waste is eliminated since the "print head" is precise in the laying down of the material. The machine only requires 2 operators to run it.

A key point to keep in mind is this is what is possible today, in 2020. What will things look like in 2030?

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Another project that is catching some wind is in the area of pre-fab homes.

The construction industry long as tried to mirror the world of manufacturing which has advanced tremendously in the last 40 years. Unfortunately, due to a variety of constraints, the construction industry is mostly the same.

A California company is now combining pre-fab, 3D printing, and automation. This is done in an effort to build more homes which are in huge demand, at affordable prices, and quickly.

California presently has a housing shortage as well as an average price tag over $700,000. That is out of range for most families. This puts people in position of having to line up alternative living arrangements.

Here again, we see the early stages of development. Like most new technology, things starts small. The homes they have range from a 350 foot studio up to a 1,400 square foot home.

Prices range from $183,750 to $409,500. This sounds like a ton of money but for housing in California, it is a lot lower than what the average property goes for. The advantage to these is the are permitted to go on properties with existing structures.

Once again, we can think of this as V.1 of the technology. What will things look like in a decade?

It is easy to discount a prediction such as being made here. To many, it is simply unbelievable.

However, consider for a moment that we already saw real estate prices in New York City drop 30%. The work from home movement is only just beginning. It is an idea that likely takes hold. This will cause of the artificial urban real estate bubble. In many countries, land is not a problem. This is especially true if farmland is freed up due to advances in food production.

When people move away from urban areas, land get a lot less expensive. If we can see construction costs dropping as this technology follows the path of informational technology, it could cause a complete collapse in prices.

Think for a moment about the printer on your desk (if you even have one anymore). Now compare that to what was available two decades ago. The speed is increased and the cost of the device as well as the consumables is a fraction of what it use to be.

There is no reason to believe that these devices will not follow a similar path. These construction printers are connected devices, digital in nature. They are tied to computers meaning that software enhancements will play a large role.

Here we see other factors such as AI and robotics entering the picture. Both will have a profound impact on the entire construction process, once again putting further downward pressure on prices.

Convergence is one of the most powerful forces in technological advancement. When separate technologies make progress, things begin to take shape. However, when the converge, they go parabolic.

The construction and real estate industry are primed for disruption. Technology is about to turn both upside down.

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