Disruptive ideas that can transform housing markets

Exhibit C of Wouldn’t Unconditional Basic Income Just Cause Massive Inflation?

Being that many of us spend the greatest portion of our incomes in one place on rent and that they seem to just go up and up without end, rising rent is a significant fear in general, let alone in regards to giving people more money. To address this fear we first need to look at the particular location in question and understand how many vacant homes there are compared to homeless, as not all places have the same room to grow.

Housing Supply

Here in the United States, there are about five vacant homes for every one homeless person. That’s a lot of excess supply and room for development in a future of guaranteed income for food and housing needs. These vacant homes can be developed, alongside entirely new homes, in a market where the poor actually have money to live in them, in contrast to the current market where luxury apartments and large houses are the best bet for developers to see good returns on their investments.

In addition, because a universal basic income will be the same amount for everyone wherever they currently live, it will unlock people from the existing requirement of living where the best jobs are. People will therefore be free to move from areas with higher costs of living to areas of lower costs of living. The effect of this decrease in population density will be downward pressure on prices in high cost of living areas.

Not all people will want to spend less on housing though. Some will want to use the extra money provided by their higher incomes to move into nicer residences. The effect of this will be to open up greater supply at the bottom of the income spectrum, putting even further downward pressure on these prices in high cost of living areas.

Meanwhile, new homes are getting cheaper and cheaper to produce as time goes on. 3-D printing stands to be a game changer in the future production of new homes. And I don’t mean far future, I mean immediate future. In China, a company has already printed ten houses in a single day using recyclable materials and a $5,000 printer.

This technology already exists. It need only be improved and scaled.

Combine advancing technology, basic income-powered new business creation, the competition of continued capitalism, as well as the newly gained ability for people with basic incomes to move from more expensive areas to less expensive areas, and it should become apparent how unwise it would be for those who own property to increase their rents to absorb basic incomes.

E.g., if your rent is currently $800 and it gets raised by a greedy landlord to $1,800 to fully absorb your $1,000/mo basic income, what would you do? Your available options won’t only be to move into a place for the same $800 you’re used to paying. Your options will also include the exit option of moving to a cheaper area where rents are $600, or living in the same area in a newly-3D-printed affordable home that costs half as much to build. And it is this last option that leads us to the truly inevitable game-changer.

The Google Home

Let me be clear. The Google Home does not yet exist, at least outside of potential top secret drawing boards at Google X. But it represents the idea of future ultra-affordable housing. It will be the realization of the same idea that Henry Ford applied to cars and that Sam Walton applied to retail goods.

If you want to make a million dollars, you sell to the few. If you want to make a billion dollars, you sell to the many.

We seem to have forgotten this knowledge gained long ago, that making a product continually cheaper while maintaining or increasing quality is the path toward complete market dominance. The Model-T was a car anyone could afford without even taking out a loan thanks to Ford continually striving to lower its price. Love it or hate it, Walmart is a living monument to the idea that lowering prices will increase revenue and lead directly to utter market domination.

There is one company in particular that exists today, that knows there is an even better price than cheap. That company is Google, and the price is FREE.

Cheaper is good, but free is best.

No price beats free. Dan Ariely covers this well in a chapter in Predictably Irrational, as does Paul Mason when he discusses the future of capitalism.

And this is the direction we are going, for better or worse.

If you watch this last video of Aral Balkan’s RSA talk titled “Free is a Lie”, you’ll notice how Google has monetized information to the point it is already reaching into our homes.

• Its purchase of Nest (and Nest’s subsequent purchases of Dropcam and Revolv) gives it an increased ability in this regard.

• Its creation of a phone that maps space gives it an increased ability in this regard.

• Its creation and expansion of Google Fiber gives it an increased ability in this regard.

Google makes products and services available to the masses either free or far cheaper and/or better by monetizing the information it can get from the product or service and selling it two third parties instead of asking for money from end users themselves. So where is this going?

If Google wants inside our homes, why not just rent us our homes instead?

Combine 3D-printing with Google Homes, and 3D-printed Google Homes could be even cheaper than any other form of 3D-printed home, because it is Google who could best subsidize the cost through the data collection it already leverages.

Now, I’m not suggesting this in itself is a “good” thing. But, it’s a definite possibility and it’s aligned directly with the direction Google is already going.

So, what’s all this got to do with UBI and inflation?

Google could decide to create the cheapest houses possible.

Meanwhile, basic income makes possible a guaranteed ability for people to pay Google for these homes.

Together combined, these possibilities mean a market for housing on the low end, the likes of which we’ve never seen in history.

Imagine a one-bedroom Google Home on the rental market for $250 per month in a future where basic income exists. They could even throw in Google Fiber as a package deal. The effect of Google Homes on the rental market would be the same as Google Fiber on the ISP market — entirely disruptive where available.

Why pay $100 per month for spotty 10 Mbps internet from Comcast, when you can reliably get 100 times the speed for the same price from Google? In the same way, why spend $1,000 per month on a one-bedroom apartment when you can spend $250 per month on a one-bedroom Google Home?
Because privacy? Are privacy concerns going to stop people from spending only 25% of their basic income on rent instead of 50-100%? And will privacy always be a concern, and to everyone?

Meanwhile, what about “Indie Tech”? There remains the possibility that the open source movement (which also stands to be enhanced with UBI) could provide the same goods and services as Google, without the privacy concerns. I believe the WikiHouse exists as an early example of this possibility.

The WikiHouse

“Architects have struggled to find a viable model for building cheap, fast, single-family homes since the earliest experiments with pre-fab in the 1900s. It’s an idea we still grapple with today, and WikiHouse is its direct descendent: A project to publish open source building plans online for anyone to download, designed to require only the most basic knowledge of construction to create. The average cost of buying a home in America hovers around $300,000 — WikiHouse 4.0 can be built from scratch for less than a third of that.”

Right now, someone can already build their own WikiHouse themselves for about $80,000. This will only go down with each newer version. What if WikiHouse 10.0 costs $29,000? That’s a monthly mortgage of again about $250 and paid off in 15 years instead of 30. When people have basic incomes, will no one go this route to maximize their basic incomes by spending the least amount as possible on their rents or mortgages?

Basically, it seems to me that if Google X isn’t already working on Google Homes, they should be, and with a basic income guarantee in existence in the form of an unconditional basic income or a negative income tax, it seems even more likely.

With the arrival of basic income policy, there will be a huge market created for ultra-afforable homes to rent or buy. Combined with everyone’s newly gained ability to live anywhere they choose instead of being anchored to where jobs exist, this will undoubtedly introduce downward pressure on housing prices, especially when Google or someone else gets into the game to dominate this new market with new technologies like WikiHouses and large-scale 3D-printing.

Welcome home to the 21st century.

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