REAL ESTATE

“Smart Cities”

As discussed in Chapter 7 of our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology, and several previous Real Estate blogs, the purchase of a home may be one of the biggest decisions, and investments, to make in one’s lifetime. Over the last few years, it has never been more difficult for young buyers, with rising inflation, property prices, and property taxes/insurance. Commercial real estate has seen its own crisis as well, highly affecting small businesses with office vacancy and plunging values. The situation appears to be only getting worse, with an increasing number of defaults and loans coming due.

      Recently, the outflow of residents, and businesses, due to individuals/owners being “priced out” of their homes, has created a sudden inflow of new residents, many of whom are either low or mid-income, looking for affordable housing. Combined with efforts to eliminate some vehicle travel across the country and globe, the increase in “remote” work ability, and advancing technology, a new type of community is being developed.

      This increase in the number of homeless, and immigration, into sanctuary states and other metropolis areas, is also contributing to this new housing “crisis.” This leads to an increasing push to a re-brand of many major cities, with conversions of business/office properties to dorm-style housing complexes. Known as “Smart Cities,” these urban locations are touted as technologically advanced to improve infrastructure, including AI, green energy, internet connectivity, and even tech-driven jobs. They are also said to provide better public services, security, convenient transportation (including electric vehicles), and less air pollution. Many major cities, such as Atlanta, San Francisco, Miami, and Seattle, as well as others, are currently leading the way with this futuristic technology, reminiscent of some movies we have all seen that never seemed possible.

      Whether you are a fan of such locations or not, what does this transformation mean for the real estate industry?

      For builders, contractors, and advanced technologies, there would appear to be ample opportunity for new projects, employment, and prosperity. Lenders and banks will also benefit, as all projects require capital and loans. The problem is, the same leading companies will see the largest profits.

      For intelligent and accredited investors/venture capitalists, there will be plenty of opportunities to profit from initial investment, stocks, and options associated with these companies.

      For residents, however, it may be a different story. Whether you are sold on alternative energy, digital assets, electric vehicles, and government controls, there remains an issue of affordability, which we often note on our blogs. For those who choose to inhabit the “smart city,” along with the many restrictions, there will be high costs affiliated with the technology, the demand for space, and greedy “landlords,” whoever they may be. The costs are sure to be high, as an increasing amount of electricity, infrastructure improvements, and services are necessary.

      For those who wish to remain out of these locations, the recent rise in regulatory requirements, high interest rates, increasing property taxes, and outside investors purchasing homes to turn into rentals, continue to be problematic. The global and national housing markets are showing signs of trouble, and the expected defaults are rising. There is also the possibility of less access to essential products and services if further controls are implemented. Prices do not appear to be falling significantly anytime soon, and are mainly affordable to the well off. Those who are already self-sufficient in rural areas are likely better suited to continue their life style. Those rushing to purchase homes in more rural areas may find the house hunting difficult regarding availability and price.

      There are currently numerous locations across the world that are being transformed, with one example being the “re-imagining” the state of California after the recent horrific wild fires damage, rather than simply allowing residents to rebuild. Without becoming political, there are many mysteries regarding these “weather-related” disasters, which are wiping out homes at an alarming pace, creating hardship, panic, and death.

      “Smart cities” may work just fine for some, but be sure to prepare yourself accordingly, whether you are “in” or “out.”                 

      Please visit the website www.augustassociatesllc.com for home values, listings, and professional assistance.