This is quite a statement but an example of what is taking place out there.
To start, I must first state that, in the end, all real estate is local. As always, there will be some areas that benefit more than others. The flow of people is something that occurs for many reasons, as evidenced by the move towards cities over the last few decades.
Technology is penetrating all aspects of life. When we look at one particular application or industry, we might be fooled into thinking that things are isolated. However, when it comes to technology, this is not the case.
So why do I say the medium price (in the U.S.) never be as high as it reaches when this run is over? The simple reason is the impact of technology is starting to be felt across the board. This will, naturally, affect real estate.
To start, we now understand that a percentage of the work force is going to be working from home. The idea of having to drive 45 minutes to an hour to work is changing. This provides individuals with a great deal of flexibility as to where they reside. No longer are all forced to live in the crowded, high cost areas because that is where the jobs are. With tele-commuting, physical location means little.
One of the most obvious areas this will affect is commercial real estate. As companies decide to let a percentage of their employees work from home, they are going to require less office space. This is going to put downward pressure on demand.
The other factor is we are about to reclaim a great deal of land. What is presently utilized will be changing over the next 10-15 years.
The United States is a big country. Yet, half of the land is used for crops and range (ranching). Out food production utilized a great deal of land.
We presently have a fairly centralized system. Food is produced in one area and shipped elsewhere. This is a rather inefficient system yet is the only one we have.
With the advent of climate controlled and vertical farming, as well as the potential for invitro-meats, we could see a large portion of this land opened up. Ultimately, we are going to find that the local retailers are able to produce their food on site, eliminating the need for all this land.
Technology is already making large amounts of land obsolete. Online shopping is destroying brick and mortar. We are seeing hundreds of millions of square feet being vacated in droves. It is estimated that the United States has 35% more retail space than it needs. Effectively, higher end real estate (commercial) is being replaced by warehouses. Again, this puts downward pressure on demand.
Another area that affects real estate is education. We are likely to see a shift to a lot more online schooling, especially at the upper end. This means thousands of second tier universities will likely close up shop across the nation. Here again, we see a lot of land opening up.
Tele-medicine is another area that is following the same lines. We are at the early stages of this innovation yet the recent lock down is expanding its reach. In the future, more doctor "visits" will take place online, necessitating less office space in the medical industry.
These are just a few of the moves that will be affecting real estate prices in the future. This list did not even cover the advancements being made in construction due to robotics, 3D printing, AI design, etc.. It is likely we will get to a point where the cost of construction drops by 20% to 40% in just a few years.
And just wait until we start developing under ground and under water cities.
That is really going to be a hoot.
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