By Dan Polimino
Last month we began a two-part article which looks at the top six things affecting the real estate market today and in the future. At that time we looked at the top three MAJOR factors affecting the present-day market. If you’d like to re-read that article, you can click here: Top Three Major Factors Affecting the Real Estate Market
Today I’d like to focus on what I think are the three major factors that will affect the real estate market for the next 10 to 15 years and beyond.
#1 – A.I. (artificial intelligence) is what everyone is talking about these days. The power of AI. What will it do? Will it help us, or will it hurt us? Can we control it? Will it displace people and their jobs? What about its role in real estate?
Well, there’s a lot of speculation about what AI will do, and whether it will take over our industry let alone the world. Right now, AI is primarily being used in real estate to write copy. In other words, real estate agents are using the power of AI to write property descriptions, to write emails, to write brochure copy, to come up with blog and vlog ideas as well as create titles, tag lines, SEO and so much more.
Where I see it making the greatest impact is probably in the analysis of real estate data. For instance, I could see people being able to talk with an AI chat bot about analyzing a particular city like Kona, Hawai`i. Then asking the Chatbot to analyze sales from the last 12 months in that area, cross reference that information with rentals and have the AI bot come back with an investment analysis on which house should be purchased for the greatest return on investment. Calculating cap rate, income, expense, and vacancy rates will all go away. The phrase, “let me put a pencil to the numbers,” will be no more because AI will do it all for you. Predictive analytics already exists to help real estate professionals determine what is most likely to sell next. However, AI could take this to an entirely new level. In addition, I believe it will be able to tell people what house to buy in a particular neighborhood, and how much to pay based on an extensive set of data points, including intangibles like views, finishes, layouts and other factors usually having to be seen in person. And dare I say that AI will be telling people what realtor they should hire…it’s a good bet.
#2 – Driverless cars. There was a lot of hubbub about this a few years ago when testing of driverless cars was going on. There were a fair number of accidents and then much of that discussion in the media went away. However, the idea of driverless cars and trucks has not gone away, and a lot of the testing has been done behind the scenes. I believe we will be in a driverless car society in less than seven years. In 10 years, I believe that most Americans will no longer own a car. I know you think this may sound far-fetched, like it’s never going to happen, but had I told you 10 years ago that a bunch of soccer moms were going to be driving their own minivan to take people from their house to the airport and getting paid to do it you would’ve told me I was crazy.
The reason why most Americans will go driverless and forgo their personal freedom of having their own car is the sheer amount of savings. Not having a car payment, not having repairs and maintenance, not having to purchase gas, or electricity, not having to pay for car insurance, or even having to pay for a car wash. Think about the amount of savings the average American would have. Instead, all they would need to do is open their phone app and call a driverless car to pick them up to take them wherever they needed to go, then pay a small nominal fee. Car dealerships as we know it today would no longer exist. Instead, car dealerships and their huge parking lots would become fleet managers. This is where all the driverless cars would be stored and serviced when not in use. All the major car manufacturers will then compensate their dealerships for storage and service instead of the old model of selling cars. So, you say, Dan how does this impact real estate? Well, that’s easy because when you have a driverless car you now open a wide range of possibilities as people could live anywhere. When somebody’s getting ready to purchase a house, they would no longer have to consider the proximity to work and how long it’s going to take to get there in traffic. You see, each driverless car will have high-speed Internet so you could just sit in the back with your laptop and a cup of coffee and do all your work, an extension of your home office. How long it takes you to get to the office would no longer be a factor; that gives builders of subdivisions way more land to work with. In addition, if the average American is saving several thousands of dollars a year because they no longer own a car, what could they do with that money? Could they buy a second home? Could they buy a vacation home? Could they buy investment properties? All real possibilities if you no longer have the expense of a car. This will have a massive impact on the real estate market.
# 3 – The ability to replicate organs. If you thought the last idea was far-fetched, you’re going to love this one. For some time, scientists have been working on growing organs in the lab. Stem cell research and genetic engineering have already paved the way for everything from growing a bladder in a lab to cloning sheep. If you’d like to read more about this, look up tissue engineering and regenerative medicine. It’s fascinating reading. I predict in the next 10 years that growing organs for people that may be dying or in need will be commonplace. Getting a replica pancreas, kidney, liver, bladder, or lungs will all be real possibilities for us. And doing so will have a major impact on real estate – here’s how.
There is already a severe shortage of homes in America, and this is not going to get better in the next 5 to 10 years. Part of the problem is the average American is living much longer. Most data show the average American is already living to about 76 years of age. If Americans could live another 15 or 20 years because they got a new heart, new lungs, new liver etc. how long would the average American live? Could we say that we could live well past 100? I not only think that’s true, I think it’s going to be a reality and that’s going to cause a severe housing problem. When people die, they often give up a property which is then sold or passed on to someone else. If the average life span of an American is well into the hundreds, then the words “inventory shortage” takes on an entirely new meaning. There won’t possibly be enough housing for all the people in America.
So, there you have it. My top six major factors which are affecting real estate present day and in the next 10 to 15 years to come. It’s a fun discussion, it’s a fun debate and I hope you’ve enjoyed what I’ve written in these last two blogs. As always, I welcome your comments; please share with your friends and if there’s anything we can do for you here at The Hawaii Team, we are happy to help.
Dan Polimino is the owner of the Hawai`i Team in Kailua-Kona, Hawai`i. He and his team are the luxury residential experts for the Big Island. If you are thinking about buying or selling in Hawai`i, then please reach out to us at team@thehawaiiteam.com or call 808-913-0899.
