The Construction Industry Changing Before Our Eyes

in LeoFinance2 months ago

Over the last few months, I wrote some articles about 3D printing and its impact upon the construction industry. Like most things, it starts out slow before really kicking off.

The key to success is seeing where things are going so as to be on the right side of trends. Those who got it wrong are legendary. Between Kodak, Blockbuster, and General Electric, the companies that misread things are examples of how expensive things can be. Ultimately, many of them ended up out of business due to this.

What we are seeing in construction is truly disruptive. It is also totally revolutionary.

The following link contains a short video that is very informative. Give it a look to see how things the potentially changing.

https://www.cnbc.com/2021/02/25/you-can-now-buy-a-3d-printed-home-heres-a-look-inside.html

The company behind this is getting a ton of interest on all ends.


Source

To start, notice how they are getting a lot of offers on the property they created. This is due to the fact that they are undercutting the market by a significant margin. Also, due to the efficiencies the printer brings to the construction process, the company has better margins.

Therefore, we see a company that is able to push their product out for half of the competition while maintaining better margins.

Think about that for a second. How are the traditional builders going to compete? The answer is that, unless they change their ways, they will end up like Blockbuster and Kodak. There is really no other alternative.

We also see how much interest was drawn from around the country. The process is appealing to others in the industry who are looking to build out entire subdivisions. Here is where we see the truly revolutionary impact that could be unfolding.

The key to disruption is, eventually, mass adoption. Having other developers and builders wanting to follow suit is what will spread the technology like wildfire. A couple of houses in New York are not going to radically alter things. Developers all over the country, however, is another story altogether.

Which brings us to the bigger issue: residential real estate in general.

Here is where we see the major danger that could impact things on the macro level. Consider the numbers with a countries residential real estate in total. It gets into trillions of dollars. The problem is the deflation that we are facing will eradicate a lot of that wealth in a few short years. This is exasperated by the fact that real estate tends to be funded through debt.

Since people take out long term loans when buying real estate, what happens when the values drop significantly, and not for just a short period of time? In other words, what if the value if residential real estate drops permanently 70%-80%? How are people going to handle the debt when the value of the underlying asset is worth a fraction of what the note is?

This is truly unprecedented in terms of the numbers. When the video cassette industry (Blockbuster) got wrecked by streaming, the impact across the economy as a whole was minimal.

We will not see the same with real estate. It is vital to understand the video cited 50% savings versus new construction using traditional methods is 2020 technology. What will the technology look like in 2030 or 2035? Consider not only 3D printing but also robotics and AI to uncover the potential impact on prices in the future. Could we see the price of real estate drop by an ever greater amount down the road?

And how does that affect all the homes that are already built and bought with debt?

There is also the potential popping of the artificial urban real estate bubble that was in place for more than a half a century. The urban areas had the advantage of a monopoly of high paying jobs. Of course, that pushed up the cost of living for all including real estate.

As we move further into the digital world, transitioning to the virtual, more people will be making their living in this medium. That means that where they live, in terms of the job, is of less importance.

Combine all these factors and we can see there are some major questions with the future of residential real estate.

Based upon this analysis, along with the impact of technology historically, it is hard to dismiss the idea that this industry is going to suffer anything other major deflation. Prices simply will not be able to hold up in the face of these pressures, all of which are going to push them downward.

As the above video shows, this is already starting to take place.


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Now that housing costs will go down, I wonder how the government is going to change property taxes to ensure they get their cut. The government gets a part of every transaction and I doubt they are willing to give up the extra money they got for the construction industry. I feel it will be a huge property tax to make up for the difference. All they know is to increases taxes so they can get more from the poor.

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The hunt for taxes is certainly on. We are going to see this across the world. Politicians will not embrace austerity. Instead they will keep sucking more out of the economy until they face the point of collapse.

Confidence in government is waning. That is going to cause problems over the next 3 years.

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With automation happening, I wonder how the government will handle taxes. I can't see how this model is sustainable long-term and at this rate, they might have to resort to UBI. However UBI is also unsustainable long-term. It may work for a while but people will have all the time in the world to look up information and see how messed up the system is.

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Good point.

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@jfang003 yeah taxes and government is like bread and butter,they do go get attached together...the government of course do not joke with taxes especially with property taxes....they of course will find a way to milk people to pay those taxes,just like you said,sadly the poor ones might feel the heat too...

This type of technology has serious implications. More bailouts and more money printing is the ONLY way out of the financial market catastrophy this will bring about. Cheaper housing is fantastic. I love the idea but residential and commercial real estate are collateral as such a large amount of outstanding debt that there is no way this can be resolved through mass foreclosures.

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That is true. A lot of defaults on the horizon.

Those buying a house are going to have issues. I can foresee the values of real estate collapsing over the next 10-15 years.

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The ability to build a house that is to code and of equal or higher quality at half the price introduces a double whammy on the real estate market. The other is the widespread adoption of virtual reality.

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I saw just the other day about the first house being fully 3D printed. That gives you the ability to create houses on a massive scale! I would suspect a huge reduction in costs as well. Honestly 3D printers are a very powerful thing and I'm curious to see what other things we will start mass production with on them. The downside it's going to push a lot of people out of jobs of course. But you've been writing about that for a while now.

It will of course definitely reduce the construction costs especially when it has to do with the human labour in the sector,the job loss is expected to occur and that is why people need to be prepared for the realistic situation of things that will occur in the future and how they can handle things in a better way...the fact is that the automation is really necessary and we need technology in our lives ,we need to change the way things are done and we need to leave the "old school" of doing things in every sectors in the world.....

3D printing is going to change a lot of the manufacturing industry.

We are going to see a lot more localized production due to this technology. Of course, that will push the cost of things down yet will affect a lot of industries, such as transportation.

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@taskmaster4450le yeah it will affect the transportation industry but benefit more people in the world...so I think benefitting more people is better in this kind of situation...

You must keep pace with the market and customer requirements
It just doesn't work right now if you keep on old fashioned.
Customers always like to see something new and try it out.
We have seen many examples of collapse due to failure to keep up with the times, including Nokia companies, Internet Explorer browser and others. This also applies to buildings.

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If the buildings can be made to code at half the cost, then this will be unstoppable.

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That is today's technology.

What will the numbers look like in 10 years? Will they be reduced by 80% compared to today?

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Tech like the 3D printing technology will be able to stop the old fashion way of doing things in the construction industry and the real estate market as a whole....

Vey skeptical of housing prices going down but I would love to be proven wrong :)

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When has technological disruption been anything but deflationary?

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@taskmaster4450le all I know is that technology is bringing in alot of revolutionary Impacts to our lives if we embrace it and understand that we need it for a better future .......

Based upon this analysis, along with the impact of technology historically, it is hard to dismiss the idea that this industry is going to suffer anything other major deflation. Prices simply will not be able to hold up in the face of these pressures, all of which are going to push them downward.

This is a food for thoughts that everyone should not ignore ..that is the truth that we just need to accept and it is the reality too... Thanks for this wonderful information sir....@taskmaster4450le

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The construction industry has also adopted the technology and it is much needed because buyers also expect something new and old things can not be used for long. Its expected to have it upgraded even more in the coming years.

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Between Kodak, Blockbuster, and General Electric, the companies that misread things

I drove by the last Blockbuster in Bend OR not to long ago. They are doing well and I'm sure it is just a matter of time before things massively turn around for them. ;)

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@natalia-irish

We have seen many examples of collapse due to failure to keep up with the times, including Nokia companies, Internet Explorer browser and others. This also applies to buildings.

Lol that internet explorer still surprises me with the way it went down so quickly,now it seems no one on Earth is making use of it anymore to access the internet,it's funny how technology changes things so quickly and if you do not catch up then you will miss out on the great things ahead...

Yeah but we also need to consider the reality that there will be some kind of job less since there will be alot of automation going on,nothing good comes easy so of course it is like sacrificing a job loss for a better development in our society...yeah job loss will be hurting but a better future is ahead with a wonderful technology
...it has great long term benefits for us all...

Microsoft missed a bunch of success in the early Internet. They whiffed on IE and search. They were in position to dominate the early days and passed it up.

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@taskmaster4450le then that is why they need to learn from their past mistake....or probably need to improve their tech department....