Sometimes, when paying attention, you see the first dodo bird coming out.
In the past, I wrote about 3D printing in the construction industry. The past few years saw advancement in this field, with proof of concept buildings put together. Some ended up being used like a commercial property that was built in China.
Now, however, we see a 3D printed home that was not only completed but permitted for sale.
Patchogue, New York is the recipient of the new honor. This home is about 1,400 square feet and has a 750 square foot garage. The list price is $399,000.
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The attraction of 3D printed home is the time and cost required. Construction is still an archaic industry with homebuilding basically resembling how things were done 100 years ago. This is starting to change.
Using SQ4D's Autonomous Robotic Construction System (ARCS), the home was printed on site. The company developed its patent pending ARCS technology to robotically build the footings, foundations, and interior and exterior walls. The proprietary hardware and software enables the construction site to be safer while creating eco-friendly homes at a fraction of the cost.
Here we see, first hand, the breakthrough into what will be commonplace down the road. With all the experimentation in this field, we are now at the tipping point where 3D printing is going to take up a piece of the home construction process. This will help to drive down costs while better utilizing materials.
"At $299,999, this home is priced 50% below the cost of comparable newly constructed homes in Riverhead, New York, and represents a major step toward addressing the affordable housing crisis plaguing Long Island,” says Stephen King of Realty Connect, the Zillow Premier agent who has the listing.
As we can see, this is half the cost of a comparable home built using traditional methods. This is a game changer in an industry that runs into the trillions.
While many focus upon the idea of affordable housing, there is a bigger issue to focus upon. What is the pace of progress with this technology? If we can get 50% reduction today, in 2021, what will things look like in 2025 or 2027? We know that technology tends to get lower in cost while improvements in capabilities are realized.
The answer to this question is the true game changer. If we start to see 75%-80% reduction in home construction costs, that will really drive down the prices of housing. Of course, that is good for the buyers yet it is bad news for those who are trying to sell existing homes.
Never have we see technological advancements like this take place with such an expensive personal asset such as a home. This means that millions could find their homes are underwater when they go to sell them. Another way of phrasing it is that it cold collapse the real estate market.
Technology is extremely destructive to incumbent methods of doing things. This is something that few in the real estate market are looking at. However, if one takes a long term view, things could be rather bleak for those who are holding property at this time.
Going back to the question, what if the cost of home construction drops by more than 90% by the middle of the 2030s? This is not unheard of in the technology field. What will this do to the cost of properties and all those mortgages tied to them?
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This is also going to feed into the overall deflationary pressures that we are going to see over the next decade plus. When dealing with a high ticket item like housing, a drop in prices really sends things south quickly.
Over the past 40 years, we saw the result in electronics and computation. Now, it is going to extend to other areas of the economy. This is going to have an impact that will catch many by surprise.
There is little bigger, at least in terms of dollars, that is larger than real estate. A large part of that is dependent upon construction costs. If we see some of the reductions mentioned above, we could see the pricing throughout the entire market have to adjust downward.
While this will be painful to go through since so much of the industry is leveraged, it will, ultimately, end up being good for the purchasing power of the average person.
This is the future and we just saw Case #1.
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