How Will Robotics and Automation Affect Real Estate?
Ever since the Industrial Revolution, economies and markets have had to make adjustments for emerging technology. The auto industry’s streamlining of production brought vehicles within reach of the average consumer, both in terms of inventory and price. The Digital Age increased businesses’ ability to delegate tasks to computers rather than laborers, while raising up an entire generation of highly specialized workers with in-demand skills.
Real estate is no different, and the specter of robots on the horizon isn’t the industry’s first brush with new and impactful technology; take, for example, the significance of the Internet when it comes to real estate transactions, house shopping, and professional engagement.
It’s worth examining the potential effects of emerging technology with respect to real estate as the advancements pick up their pace. While most people understandably view technology that intrudes into labor’s territory with suspicion, the possibilities aren’t all bad.
Somewhere between having one’s head in the sand and imagining a Matrix-like dystopian future, there exists a happy medium for objectively measuring the effects of and anticipating the future impact of developing technology.
So how will technology, and robotics in particular, affect the housing sector?
Robots aren’t taking any jobs, for the most part. They’re filling demand where there’s a shortage of labor.
The most noticeable impending change (or at least the one that seems to cause the most worry) is to the labor market. Automatons are cheaper than human workers, for obvious reasons, and therefore businesses will have a greater incentive to utilize them.
That’s not the entire story, though. Labor isn’t being pushed out of the industry so much as it’s in short supply.
After being laid low during the housing bust and the Great Recession, America’s homebuilding complex is back on its feet, but homebuilders complain that a shortage of workers is hindering their ability to keep building. The usual solution for industries facing labor shortages is to apply technology and reengineer business processes so that a home, in this case, can be built with less human labor.
But it’s important to remember that even though the increased prevalence of automation, both current and predicted, is picking up the slack in the labor market rather than pushing workers out, it will still come with changes to the housing sector.
This is because home construction is custom work, for the most part. Remodeling, renovation, and construction don’t necessarily follow one-size-fits all plans.
Think about the overwhelming amount of choice people have when building a home: gravel or asphalt in the driveway, 500 different shingle styles to choose from, gas or electric heating, landscaping, appliances, bathrooms, and windows. There are plenty of planned developments and apartment buildings built in the U.S. but even here there is a great variation from project to project, and within projects.
So while automation may exert some high-profile effects on the housing sector, those effects are better measured on a macroeconomic scale as opposed to thinking of them only within the context of labor, because the sheer amount of variability in construction ensures that, at least in the short term, laborers and highly specialized workers will still be a necessity.
The effects of automation in the housing sector may touch everything from consumer preference to housing costs to worker specialization – and it’s a net benefit overall, for the most part.
When homes can be built more cheaply, there’s an inevitable effect on pricing. This is far from certain, but conventional wisdom holds that the increased use of automation in construction will necessarily drive prices down, which is a win for consumers across the board.
But there’s a trade-off: much like building cars, homes that are constructed in a similarly automated and efficient manner are likely to be more modular and congruous. We saw the beginnings of this with standard floor plans and the McMansion neighborhoods.
This may influence consumer preferences over time, with buyers accepting less unique homes in exchange for lower prices. As inventories rise, less competition among buyers may exert pressure on sellers while keeping brokers, investors, lenders, and agents extremely busy day in and day out.
In terms of the job market, while an automatic bricklayer may remove the need for a few human bricklayers, it creates the need for the technicians who repair the automatic bricklayer, the mechanical engineers who design it, the workers who manage and operate the factories that built it, and the software engineers who program it.
This is the most significant effect of automation: forcing workers to become more skilled and specialized. In the same way that the steam-powered loom both destroyed and created jobs when it was invented in the late 19th Century, automation in construction is likely to have a similarly neutral effect on overall employment while netting economic gains from a more skilled workforce.
One notable example isn’t even a robot, per se: 3D printing stands to revolutionize construction on its own because of its vast potential for efficiency and consistency. As for the skills required, tomorrow’s building engineers and architects will ideally need to master the software programming skills on which 3D printing depends.
Learning to work alongside automated technology will be an increasingly important requirement for the welders, masons, bricklayers, carpenters and other workers who physically build the houses and offices we use.
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- Get It Right Solutions