John Sorkvist

John Sorkvist

Your opportunity is here for a more positive and successful life. The one you have always held in your thoughts.

Real Estate, Same Game New Rules

Real Estate, Same Game New Rules

Here we are on the age of the 4th Industrial Revolution where the technological advances are putting pressure on any jobs that create a middleman. This ranges from transportation, sales, marketing, brokerage and even cable are all susceptible to this change. It is a huge shift we are struggling to grapple with as we have great advances in technology but now less jobs due to this streamlining effect. I have talked about how you survive this new age before and with any change there is always opportunity so don't be afraid as I will continue to talk about how to navigate these changing times. For now I wanted to focus on real estate though. It is the niche I have been a part of for nearly a decade now and the entire time it has had one singular focus, cities. Our entire market is centered around the convenience of cities with jobs, entertainment and nightlife abound. This 4th Industrial Revolution is about to change this in our lifetime in a very dramatic fashion. 

Lets start with why cities have been the concentration over the past 10-20 years in real estate. For one thing since college has become more prevalent in our society from Gen-X and millennials it has been ingrained in these generations that convenience is essential. College showed these generations including myself how great it is too be able to work and play all within a short distance. With short commutes in college towns, you can work and then go out all within a short distance usually. It created the first stepping stone to why cities have become popular. 

The next part was crime as these two generations began to love the idea of work and play in the same area, cities like New York City began to clean up. You had this huge push to create safe city environments for people. So all of a sudden you now had the potential of the college experience in your professional life, all the work, living and play right in your very own neighborhood. You cant beat it you wouldn't have to have a long commute from the burbs, the dangers of city living and you have the convenience of everything being right there while also not having to worry about having a drink and then driving. What could be better. This is what has made cities so popular.

Now they have become victims of their own success the convenience is now costing much more then people can tolerate. I say tolerate because even for the most wealthy individuals the cost of what you get sometimes doesn't match what you pay. The prices for real estate, food, transportation and necessities is extraordinarily high. This drives down your quality of life because your apartment is small and not what you would like, you want to be out but the price of food is extraordinarily high and so it is putting extreme financial pressure on those that even want to be in the city. 

So this problem of high pricing is coming in an era of increased streamlining in the 4th Industrial Revolution. This means real estate wont be wiped out it will simply change again. This pricing pressure that has occurred will be met with conveniences never seen before in history yet such as self driving cars, more mobile offices and ease of transportation. Projects like HyperLoop One will allow commuters to get from New York To LA in a half hour making commuting too and from cities obsolete. Therefore freeing up pricing pressure on those in the cities to seek affordability AND convenience else where. We have seen this before in US history when cities were wildly popular before WW II. What happened was the invention of the highway, all of a sudden you could more easily travel to the city while having more space. See what I am getting at here same game but just new rules.

We can now have the convenience of getting to a restaurant or office and not worry about having a cocktail and driving because of these new advances. It will make the city less and less appealing over time and put a more downward pressure on real estate in the city. It will then become more about living in open spaces with city quality restaurants in your local neighborhood and online shopping. Suburbs are already setting up the infrastructure for restaurant areas and nightlife and when you have these same conveniences in cheaper areas we all know what will win. The Game is the same but the rules are just changing slightly.

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