By now if you haven’t heard about driver-less or autonomous cars, then you’ve probably been hiding under a rock. Most vehicles today are already equipped with highly sophisticated sensors that allow the vehicle to operate without the driver touching the wheel or the brakes, and this technology is only getting more advanced.
As of November 2018, newspaper giant USA Today published an article about how General Motors would end production of several passenger cars by the end of 2019…next year!! In an excerpt from the article in USA Today, CEO Mary Barra commented, “GM is seeking a future defined by self-driving cars, ride-sharing networks, and electric vehicles. The cuts will make GM lean and agile as the company aims to lead in autonomous and lead in electric vehicles.” That’s a pretty significant change, right?!
Now, most would not naturally connect the auto and real estate industries together; however, the impact and infrastructure changes from this technology will be immense. The reality is that some of these changes will take place over 10, 15, 20+ years, but if you’re currently buying a home with a 30-year mortgage, then you’ve got a commitment that falls well within this transition period. Let’s think about the impacts that will likely take place.
Driving Will Change Where People Want to Live
Think of all the people who don’t want to live in dense downtown cities like Washington D.C., Los Angeles, or New York City. What if they could live an hour or two outside the city and commute to work without losing any real time out of their day? Whether they simply desire to fall back asleep or actually work via their computer during the commute, they would not have to be solely focused on the responsibilities that come with operating a vehicle.
Home values will likely be impacted as well since people would be willing to commute further when they aren’t glued to the steering wheel. This creates a lot of space between a city hub and the places people can live without taking on the financial burden of city costs.
Owning a Car Will Be a Luxury Item
Will car ownership become a thing of the past? It’s clearly no secret that the auto industry, with giants like GM and Ford, is pivoting their focus and operations on only manufacturing SUV and trucks for consumer purchases. So what about all that lost revenue from car sales?? Don’t be fooled! While General Motors will not be making sedans to be sold to the general public, GM is building a mass-market of fully autonomous cars right now specifically for ride-sharing companies like Uber and Lyft.
Owning a car can be fairly expensive by the time you factor insurance, maintenance and repairs, fuel, and the monthly payment if financed. And on top of that, there is zero return on investment, making it one of the largest household liabilities in America. The most likely scenario is that a ride-sharing company like Uber will sell passes by the month for an on-demand service that will be fast and easy. Sound far-fetched? People will happily give up car ownership in the not-so-distant future when the cost savings become glaringly obvious.
Also, once cars can finally drive themselves, the cost of ownership will go through the roof because the vehicle can effectively operate 24-hours a day and produce income without you physically being there! Meaning, the price of vehicles will likely increase substantially when people understand their vehicle can become a profit center for additional revenue.
For comparison, lots of people in America buy their own homes to occupy. Only a relatively small amount of people purchase a rental property because owning a house requires capital, resources, knowledge, risk mitigation, etc. In the future, cars will be the new rental real estate; people with means will still own cars and a few will own an extra car. The second car will drive itself around as part of a ride-sharing platform and produce income, just like a taxi, but passive.
What’s a Garage?!
If you’ve ever seen a home built in the ’50s or ’60s, you’ve likely seen a recessed shelf in the hallway area built to house a landline telephone. Of course, these have become obsolete, and without avail, some of our buyers will ask us, “What’s that?!”
Will our grandkids one day be asking us the same thing but in regards to garages? The question begs…what value does a garage actually provide outside of housing our vehicles? Obviously storage among other things, but will that space be worth the additional cost that a garage requires if you don’t own a car? Not likely.
Currently, we pay a premium for garages because they are a highly sought after convenience. However, when the majority of people don’t own cars, will that garage command a premium…or will it be a detriment?
It might be a bold claim to say you won’t need your garage in 10 or 20 years, but the world really won’t need massive, multi-level parking garages. This problem is already being tackled as efforts are already being made to find out how to convert these parking garage spaces into light retail, office, storage, and other amenities.
When Will My Daydreaming Come True?
Did you know that autonomous 18-wheelers are already being used in the UK?…Surprise! This “daydream” is actually happening beneath your nose and will likely begin to impact that way you live within the next 5 years, if not already.
Twenty years ago smartphones didn’t exist, we listened to our music on CDs, and dial-up internet on AOL was all the craze…just think how fast things have changed. I am sure Blockbuster regrets not better anticipating the shift in movie entertainment when they denied the opportunity to purchase Netflix in its infancy. Don’t ignore the change! Embrace and adapt because, in the end, the goal is to make the quality of life better all together.
Will garages be a premium in the future or a nuisance? Tough to say. But more than likely it’ll fade from importance in middle-to-low-end housing and continue in luxury homes.