AI (artificial intelligence) Will it Bring the Value of Real Estate to Zero?

Question

AI developments are being referred to as more significant than the 
Industrial Revolution by very intelligent and established tech leaders.

This IS going to change things drastically and probably much quicker than most realize.

The question I have is this:

AI will likely be the most extreme deflationary effect ever 
experienced by mankind.  AI machines can extract resources such as 
minerals and food and distribute them at no cost.  AI will be able to 
replace all repetitive labor jobs first and then more complex jobs.  
Nvidia CEO and others are talking about robots being able to construct 
robots.  AI will be able to construct homes at near zero cost. Currency 
may become irrelevant. What will happen to the value of peoples assets? 
 In this case, homes?  If people can access basic needs, and even new 
homes, for free it will eliminate rent and sales for many existing 
homes. I'm wondering if people who have assets (such as homes and 
apartments) will be given some type of credit that can be used, but what
 would it be used for if there is no scarcity of goods and services?

Carlos Ptriawan · Answer

like what most people don't get about the AI is that, currently, in 2024, the AI will become a sudden giant because there's world war three among data centre elephant and data modeler : microsoft vs google vs meta vs amazon, they are the one that's buying thousand of nvidia gpu with the hop one day that one small company or startup can replace the incumbent like google , pfizer All their purchase makes every single nvidia employee can buy a house in santa clara county easily lol. it would impact REI by a lot later on as employment and employability or group of persons would change. But the actual impact in the long term we don't know yet, but what it seems so far is that it's not good for older tech or older management in tech field if they are not agile enough. I guess we would see more migration to the south and midwest. Also to sacramento/central valley area.

Chris Seveney · Answer

@Randall Alan

Maybe in 1000 years but not in my lifetime so not something I am gonna worry about.

Jacopo Iasiello · Answer

I'm not against AI we use AI and yes those who use AI fasten their works. However, we notice it also needs more improvement as some of the results are not accurate or whatever AI you are using and my thoughts about the AI you've mentioned I think it will happen after a long time ago or much better if we all prepare.

Carlos Ptriawan · Answer

Yes and The AI already gives another price explosion in South bay area market. South bay price this month has reached a new all time high or up 11% between Q1 2023 to Q2 2024. The rise of FAANG+Nvidia stock is giving lot more buying power to some tech employees although layoff is also widespread. All these while nationwide price are stagnant. Also if they want to follow how AI would create RE price explosion follow where Huang and Sam Altman purchase their home and vacation home (the latter purchased in Russian Hills in SF and Kona lol)

Raju Balakrishnan · Answer

RE is not much disrupted so far by AI except for some small scale changes in property management and analytics. Even with todays technology, there is potential to automate several construction tasks. Probably economic or human factors are not favoring it.

Carlos Ptriawan · Answer

it's the other way around, it's going to triple the home price (and restaurant rent)  near Santa Clara's Nvidia headquarters. Buy home next to Jensen Huang's residence , from santa clara to  San Mateo as well lol just buy their land and land lol

Randall Alan · Answer

@William Coet

I’m not buying the “bring the value to zero” argument.  I’ll give you that AI can drive machines that one day can build houses to some degree.  I’ve seen today the machines that ooze out mortar of some sort to build the walls of a house.  But you seem to neglect the resources that it takes to feed these machines.  Whether it is mud or bricks or mortar, or what have you.  I cannot envision a scenario where there will not be a cost for the value of the materials.  And who do you think will develop these machines?  Let’s say the humans who programmed the AI.  Their labor will demand a payment.  The machines parts… motors, hydraulics, etc will not be free.  They will be built by those that want to profit from cheap labor to put more money in their own pocket.  So I think they will drive labor expenses lower, certainly, but for the purpose of maximizing profit for the house builders who own the machines.

Then you have the land these houses will be built on.  A scarce resource that a machine will not reduce the cost of.  You would have to acquire the land to build the house on, so I don’t see how any of this drives the price to zero.   These machines would likely cost millions of dollars, and it is unlikely they could handle the more intricate tasks of finishing the houses… think carpet, showers, stoves, air conditioners, garage doors and their openers, screened porches, and the list goes on.

Just my 2 cents

All the best!

Randy

AI (artificial intelligence) Will it Bring the Value of Real Estate to Zero?

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