Great ready for disruption to the boom/bust real estate cycle..


30/07/2021

If there’s one thing that affects the real estate cycle more so than anything else, it’s new forms of transportation. 

For example, in the lead up to the 1950s downturn, the development of the motor car had temporarily muted the boom/bust real estate cycle. 

The car allowed people to commute over greater distances. 

The effects were most evident in the US with the birth of suburbia.

On the back of it, William Levitt — nicknamed ‘The King of Suburbia’ and ‘Inventor of the Suburb’ — used mass-production techniques to construct large developments of houses, eponymously named ‘Levittowns’.

They were sold for less than $10,000 — all equipped with modern facilities — all within an easy car commute of work zones.

Many other relatively inexpensive suburban developments soon appeared throughout the country.

Increasing numbers moved to lower-priced suburbia.

It stripped away competition from higher-priced central zones. It had a marked deflationary effect on real estate values as a result.

We’ve seen a similar marginal shift with the ‘work from home’ phenomenon.

However, it’s failed to have the same deflationary effect on inner-city values as the motor car did in the 1950s. 

People still desire easy access to city areas — all rich in facilities.

What we need to really disrupt the real estate cycle are new forms of technology that allow people to live where they want — and work where they have to.

Many speculated that the next great transport innovation that would do this would be the Hyperloop.

It was conceived as far back as 1909 by US engineer Robert Goddard.

This was where Elon Musk got the idea from.

He came up with the concept for a ‘fifth mode of transport’ in July 2012.

He declared the project ‘open-sourced’ to enable others to speed up development.

A Hyperloop can take you from point to point in a loop (as the name suggests).

But to really disrupt the cycle and slam the breaks on rising inner-city values, we need something better. 

We need transport that provides personalised door-to-door service.

In other words — a flying car.

Or, as it is known in the industry, the VTOL (vertical take-off and landing vehicle).

Dozens of start-up companies and venture capitalists are competing in this space.

It includes the development of personalised jetpacks, flying motorbikes, and personal air taxis.

Rideshare company Uber is onto it.

They announced Melbourne as one of the launch cities for their ‘flying taxi’ just before COVID (which delayed the event).

At the same time, Boeing and German sports car maker Porsche also teamed up to create its own self-driving air taxies.

Boeing’s self-driving VTOL completed its test flight in 2019.

Now, AirCar — invented by Professor Stefan Klein, developed under the company name Klein Vision — is gaining ground.  

It has performed a 35-minute flight between the international airports of Nitra and Bratislava in Slovakia.

The flight is AirCar’s first inter-city trip and its 142nd successful landing.

Take a look at it in action... 

 

Once on the ground, it takes less than three minutes to transition to driving mode.

‘This flight starts a new era of dual transportation vehicles. It opens a new category of transportation and returns the freedom originally attributed to cars back to the individual,’ said Professor Klein after exiting the AirCar cockpit in Bratislava.

After folding in its wings and drawing in its tail, Klein drove AirCar to downtown Bratislava.

Klein planned to make the first sales by May 2021.

That’s been delayed — but it gives a good indication that we’re on the precipice of massive disruption to the transport industry and, for that matter, future real estate cycles.

Flying cars are forecast to quickly overtake self-driving, land-based electric cars.

Advances in battery energy density and swarm navigation systems allowing them to operate.

They’ll slash commute times and open up access for people to flood into regional areas.

Meanwhile, new forms of 3D printing will give a Levitt effect to creating a fast supply.

To give some idea, The Fibonacci House — a spiralling concrete tiny house in the wilds of southeast British Columbia — is not only Canada’s first-ever permitted 3D-printed dwelling, it’s now enjoying an additional superlative as the first-ever 3D-printed property to be listed on Airbnb.

All these developments will dramatically change the infrastructure and layout of inner-city areas.

It will allow many to live where they want whilst being able to quickly commute over long distances.

It’s too soon to have a major effect on the current cycle. 

But it will on the next.

As it is, real estate is booming Australia wide, with a peak forecast in 2026. If you’re in the market, there are plenty of chances left to take advantage.

However, the next cycle could look more like that of the 1950s — less of a boom, and as a result, less of a bust.

Time will tell…

(Written for the Daily Reckoning Australia) 

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About Catherine

Catherine Cashmore

Owner & Director

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Catherine Cashmore has been working in the Australian real estate market for over 14 years.

Originally from the UK, and having also lived in the US, Catherine has extensive experience across a range of international real estate markets.

As a buyer and seller advocate, Catherine has assisted hundreds of home buyers, investors, and developers, find, assess, and negotiate, quality real estate for great prices throughout Australia.

She is President of Australia's oldest economics organisation, Prosper Australia - an organisation that has conducted vast amounts of research into the economics of land, market cycles, and the intricacies of how tax and government policy affect the markets.

Catherine is a regular and highly respected media commentator. She has often been called upon to guest lecture at universities and educational institutions (including RMIT and Sydney University) on how tax policy affects the real estate market, the design of cities, and the economy.

She is the editor of Fat Tail Investment Research's Cycles, Trends, & Forecasts, Catherine Cashmore's Land Cycle Investor, and Catherine Cashmore's Real Estate Wealth Course – publications that teach real estate and stock market investors about the land cycle, its impact on the economy, and how to create wealth from property and stocks using this knowledge.

She is also one of the former editors of the extremely popular The Daily Reckoning Australia (or the ‘DR’ as it's affectionately known to its 60,000 subscribers).  The DR is an independent financial news broadcaster that has been in the business of reporting financial trends that shape the economy since 1999.

Previously authoring the annual ‘Speculative Vacancies’ report, the only study in the world that analyses long-term vacant housing based on water usage data (Australia-focused), Catherine has an in-depth knowledge of the Australian real estate market and economic environment few can rival.

You can contact Catherine directly on 0458 143 089 or at cc@cashmoreco.com.au 

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