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Here’s how driverless cars could affect the real estate industry

Autonomous vehicles are on the rise but there are many concerns about this revolutionary technology. The obvious concern is of course: safety. Can humans interfere if something goes wrong? Does this technology train us to be hands off and pay less attention to our surroundings? There are endless safety concerns about self driving cars. But have you ever thought of how self driving cars may affect other industries? Let’s take a look at what forbes has to say about how driverless cars will affect the real estate industry.

Article: https://www.forbes.com/sites/elyrazin/2018/03/11/how-driverless-cars-could-disrupt-the-real-estate-industry/#5ed3af0913c1

For most of the last century, the automotive industry has focused on developing more powerful, comfortable and fuel-efficient vehicles for drivers. But over the past decade, automakers have begun asking a much more exciting question: What if we didn’t need a driver at all?

Whether it is scary or exciting to you, the transportation revolution has begun! Driverless cars areon the horizon, and the implications of this technology will greatly impact just about every industry you can think of, including real estate. As a broker in Los Angeles, which is home to the world’s worst traffic congestion, it’s my business to think about how driverless cars will affect my clients — and real estate at large.

The transportation revolution will affect the housing market in five surprising ways:

1. Density in major markets will increase.

 As is common with unique technology like this, fully autonomous cars aren’t likely to be available at dealerships right away. Instead, they’ll be used by ride-sharing companies in well-mapped cities, further encouraging consumers to favor on-demand car rentals over buying or leasing models.

With fewer and fewer cars permanently housed in urban markets, the real estate around them will adjust to match. Prime real estate such as parking structures, gas stations or auto dealerships may be transformed into apartments, allowing more professionals who work in city centers to live nearby. This will increase density in our cities.

 2. Outlying markets will fill out, too.

Anyone who has had to sit in monstrous traffic on LA’s infamous 405 will confirm: long commutes are painful. However, for many residents, living close to work isn’t always an affordable option, and public transportation is limited. As a result, many professionals are stuck in the torturous traffic while throwing away several hours of their day commuting, thinking, “Hey, it could be worse.”

Driverless cars will fundamentally change how we view long commutes. Think about it this way: If you didn’t have to do the driving, wouldn’t you consider living in a suburb so that you could live in your dream home even if it is an extra hour away from your job? I would!

An extra hour that you could actually use to do work, or even prep work, could go a long way toward getting ahead on that project, or sending those last-minute emails, or relaxing with a book you’ve been meaning to read. So I predict that major markets aren’t the only ones who will see populations grow due to the driverless car implementation — so will the suburbs.

3. Housing turnover will decrease, driving renovations.

Transportation plays a huge role in our independence, especially in markets that are as spread out as LA. As seniors age and are unable to renew their driver’s licenses, the lack of transportation to places like the grocery store or bank can force them out of their homes before it would be otherwise necessary.

Driverless cars will be integral in allowing our aging populations to remain in their homes longer. As the turnover of these homes is delayed, these homes can subsequently be renovated to offer sustainable living situations for their elderly owners.

4. Construction costs will drop, but so will home price appreciation.

You might be surprised by how much construction costs are impacted by the cost of transporting materials. Simply moving materials from a warehouse to a property site can add thousands of dollars to construction costs over the course of a single project.

Automated vehicles will allow construction workers to focus on other tasks, driving costs downward — and just in time for that surge of new residential developments I mentioned earlier. Unfortunately for current homeowners who may wish to sell, this wave of new housing will impact demand, meaning it’ll take a while for home prices to start rising again.

 

5. The modern garage will be redefined and repurposed.  

Of course, homeowners will probably always own standard cars — it’s just the most practical approach when multiple schedules are involved. But as the AV model grows in popularity, purchasing three or four separate cars (and housing them) will no longer be the most affordable option available to many families, especially in major metropolitan markets.

When families no longer have cars to fill their three-car or separated garages, we’ll see a trend among homeowners to repurpose these spaces into livable areas, formalized storage or guest quarters — all while adding value to their homes.

Are you ready for the driverless revolution?

There are many forecasts out there about when fully autonomous vehicles (AVs as they are referred to by those “in the know”) will hit the mainstream, but they all suggest we’re still many years out. Currently, we’re limited to a few models outfitted with systems that allow for limited hands-free driving. Our transition to driverless cars will be a slow one. But as they make the incremental transition to our roads, the potential impact they have on the housing market is worth understanding.

Perhaps they’ll change where you call home, what you do with that extra garage space, when you decide to sell or simply how you think about your commute. Regardless, it’s time to start looking forward to the road ahead for automated vehicles — and not in the rearview mirror.

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