Some Possible Effects of Near Future Technologies on Real Estate Prices

Real estate is one of those goods that will remain scarce for the foreseeable future. It is hard to imagine a time when territory on planet Earth will not still be considered a valuable resource.

However, real estate prices might be dramatically affected (and in many cases lowered) by some near future technologies that are already on their way:

  • Automated construction techniques will allow buildings to be fabricated with less workers, at a lower cost, and in less time. Thus the price of actual structures, if not necessarily the underlying property, should fall accordingly.
  • Likewise, new automation-enabled architectural designs might allow the creation of structures that more efficiently and comfortably fit larger numbers of people within the same plot of land.
  • The growing efficacy and acceptance of telecommunication technologies should allow increasing numbers of people to choose where they live regardless of whether that location is near a job site.
  • Growing numbers of permanently unemployed people who have given up and dropped out of the labor force may find it increasingly compelling to move away from cities and other centers of economic activity. If they are not going to find work anyway, they might as well live where things are cheaper.
  • Commuting in self-driving cars will be a vastly improved experience—why not enjoy a movie or a nap during your two hour drive? Thus it may become increasingly viable to live farther away not just from your job site but from your loved ones and other amenities. Do you necessarily need to live right next to nightlife, for example, if an automated chauffeur will drop you off wherever you want and then pick you up at the end of the night?
  • Virtual reality will improve our currently narrow-bandwidth communications technologies. Over time, people will be able to get more and more of the benefits of being “face to face” by simply connecting remotely.
  • Eventually virtual reality may even get good enough that people will be able to tolerate living in much cheaper and more cramped living quarters. What if after you got home, you could put on a headset and be transported to a virtual mansion?
  • New food production methods (such as lab-grown meat) might allow us to reclaim land currently devoted to tasks like farming. Similarly, technological disruption of industries might lead to many formerly commercial districts getting repurposed as residential.

Two Alternate Singularities: Happy Pills and the Holodeck

People talk about the moment artificial intelligence equals and exceeds human intelligence as being an important landmark, or singularity. But it strikes me that there are at least two other major technological landmarks on the horizon. Landmarks that may be almost as transformative and potentially happen much sooner.

HAPPY PILLS

If we can find a way to hijack the human brain and make people feel good and contented no matter what is happening around them, then we will potentially have invented the last product we’ll ever need. Demand for most other goods should fall towards zero since they will no longer produce any utility in the form of increased satisfaction. Furthermore, as a human race we could potentially get stuck at this local maxima point and decide there is no longer a compelling reason to keep innovating and inventing new technologies, provided we can keep producing a steady stream of happy pills. In short, we could all become junkies.

Granted this is extrapolating to the extreme. An intermediate step to consider is the possibility that we simply create better than average recreational drugs. After all it is not necessarily a law of nature that all drugs must have negative side effects. Imagine if we created a stronger version of heroin that was extremely cheap and completely safe. One could imagine adoption of such a drug would be high. Such a development would dramatically transform the economic and political landscape, as many people would effectively “drop out” of society

THE HOLODECK

Alternately, if we can produce truly compelling virtual reality, then once again we will have very little use for many other products. Assuming you have the minimum resource requirements required to keep yourself alive and online, you could live anywhere, perhaps a tiny box-size apartment on a cheap piece of land in the middle of nowhere, and still have a fulfilling life. Once again, as a society, our motivation to keep innovating and inventing could suffer. Why go to space if we can go to a more compelling and safer version of space in our minds?

As an intermediate step, we need not have completely perfect virtual reality to suddenly create tremendous competition with real life experiences. Should you go outside and take a twenty minute trip in the rain to go to your friend’s party? Or should you just stay at home and visit the party virtually while drinking a beer at home? Perhaps your simulation is lacking a sense of smell and the haptic feedback is very incomplete. But how much do you need these senses at a typical party?

People talk a lot about automation of services as a force for change in the economy. But sometimes people forget the other side of the coin: digitization of goods. Quality virtual reality is the ultimate form of digitization. It promises to make unique experiences as abundant as MP3s, and could be as economically disruptive to existing businesses as any other single technology I can think of.

Is Technology Addiction the Real Problem?

In this thirty minute talk, Robert Scoble discusses a wide array of fascinating new technologies that are just now coming to market. What a lot of these technologies have in common is their high degree of personalization. Technology is getting better at figuring out what we want and giving it to us exactly when we want it.

Near the end of the video, Scoble delivers his thesis: When it comes to technology, privacy is not the issue. People are going to get used to their lack of privacy. The bigger concern is addiction.

I agree that on the surface, addiction seems like a menacing issue. We are all familiar with modern stories of technology addiction like the World of Warcraft player profiled in this short film:

But if we are going to talk about addiction we should agree on a basic definition. The one that I have always subscribed to is “continued use in the face of consequences.”

Let me illustrate with a few examples: Suppose you are so addicted to using your smart phone that you are constantly sending texts while driving. As a result you rear end someone with your vehicle. You experience various financial costs, including higher insurance. But instead of learning a lesson, you get your car fixed up and go right back to your old behavior of texting while driving. Continued use in the face of consequences.

In case that doesn’t sound familiar enough, here’s another example. You have a bit of work you need to get done. You sit down to do it, but every ten minutes or so, you can’t resist checking Facebook. You do this even though on some level you kind of hate Facebook and wish it would go away. Inevitably when you check Facebook, at least one link or comment catches your eye, and what was supposed to be a momentary break turns into about half an hour of time wasted. Repeat ad nauseum. Continued use in the face of consequences.

Now these are ordinary, everyday examples, and as such there is a way in which they feel different from the obsessive World of Warcraft player who does nothing else but play a game for 400 days straight. And yet pinpointing the source of this perceived difference is not easy. When it comes to severity of consequences the texting-while-driving example is by far the worst, since in this case the addict is risking large amounts of money and possibly even his life. By contrast, the worst thing that could happen to the World of Warcraft player is a gradual deterioration in his health that probably follows from sitting around all day.

And yet the texting-while-driving addict may strike us as more normal, not because he is any less addicted, but because he still appears to be engaged with the outside world. He is leaving his house; he is driving somewhere; he is communicating with a friend via text. By contrast the World of Warcarft player (even though he plays what could be described as a social game) never leaves his house, makes excuses to his friends about why he can’t go out, and spends most of his time engaged in an alternate fantasy world.

To make the point even more clear, let’s compare World of Warcraft addiction to Facebook addiction. What is the difference really? They are both social networks populated by avatars of real people. The difference is that while World of Warcraft is a virtual world, Facebook is more of what you might call a mirror world.  Facebook attempts to model and integrate with “real life” as we know it, whereas World of Warcraft has no such aspirations.

Now imagine that technology begins to systematically remove the consequences from these addictions. Self driving cars make it so that texting while driving is no longer a concern. Miracle health drugs make it so that you can sit around all day and play World of Warcraft without becoming obese. Intelligent personal assistant software and attention-enhancing drugs make it so that you are able to stay on track while doing your work and avoid being sucked into the distraction of Facebook.

Using my original definition, no consequences means no more addiction. We have just “cured” our addicts.

For this reason I feel like technology addiction is going to be a transitional period—a moment in time when our technology is good enough to lure us into self destructive habits, but not good enough to protect us from the consequences of those habits.

At the end of the day we are left with a new issue that I think will turn out to be more important. And it relates to our level of “engagement with the real world.”

If I give you a holodeck where you can fulfill your wildest fantasies, and you elect to never leave…the correct term for that is not addiction. At least in so far as you suffer no consequences from doing so, and the power bill that keeps the virtual reality machine going continues to get paid on time.

Rather what is interesting about the holodeck scenario is that you have just completely turned your back on the real world. You have withdrawn into your own mind, into a personalized solipsistic fantasy world where you are the one true god. Moreover, you have decided that this private heaven is preferable to the world we all share together, the real world where you don’t always get what you want, and things are often out of your control.

What’s interesting about such scenarios is that with consequences removed from the equation there is not necessarily anything wrong with such behavior, and yet on some level it is still viscerally disturbing.

In the future we are all going to be hopelessly dependent on our technology. That’s already true. In a way it’s a moot point. The big question will be, do you want to withdraw into a world of your own choosing? Or do you want to stay here in “the real world” with us?

Digitizing Entire Museums

Not too long ago, I wrote about how we will eventually begin digitizing whole experiences, and that these virtual experiences will increasingly compete with their real counterparts. In my original post I used two examples, a live music show and an amusement park.

“Just immersive sound and visuals have the potential to duplicate much of what is fun about a lot of experiences. Moreover, if the virtual space were shared and populated by other virtual reality users, than you could reproduce an important social component to many experiences.

There is not a lot of discussion of the fact that virtual reality might increasingly compete economically with real experiences. For example, the music industry realizes it can’t make much money off of selling records any more, so they have started focusing on other revenue streams like live shows. And this works because right now I don’t think there are many fans who watch a youtube video of a band playing live and think “Great, now I don’t need to spend $25 and go see them.” But one can imagine that if virtual reality technology made a few large (but very conceivable) leaps forward, this equation might start to shift.

Keep in mind there are two steps to any digitization process: the scan/record step and the print/playback step. Both are critical. So when I talk about better virtual reality I am not just talking about the print/playback step—things like 3D goggles, surround sound, and tactile feedback, I am also talking about big advances in the scan/record part of the process. Advances that might make it possible to say, stroll through a theme park and surreptitiously record the experience itself. And I don’t just mean record the experience in a linear manner. I mean record enough salient details about the geography that a sufficiently advanced algorithm could then use that data to create a digital model of the park’s layout. Now imagine that as other people walk through the park, some of them are also recording and uploading details to help improve the quality of your model. Pretty soon you have a digital file somewhere that in some senses is a copy of the whole theme park, ready for illegal file sharing. The virtual theme park might be missing some details, like the smell of churros, but such deficits would be only a few technology cycles and software updates away from being corrected.”

Granted, the theme park example is extreme and primarily intended as a helpful thought experiment. But I was interested to discover recently that the Smithsonian intends to digitize large amounts of their collection.

“With [a] high-end scanner, as well as less expensive tools that include normal digital cameras and freely available cloud-based digitization software, Metallo and his fellow 3D digitization coordinator Vince Rossi are slowly setting out to begin building a new Smithsonian digital archive. They hope this initiative will eventually lead to scores of 3D printed exhibits, as well as countless 3D models that could theoretically be used in the museums, in schools, or just about anywhere people have an interest in the Smithsonian’s vast physical holdings. They’re creating what Rossi called a “digital surrogate,” a “new form of museum collection” that could mean a wealth of information that could be available to anyone with a computer, or at the very least, to a wide variety of museums, schools, and other interested institutions.” (read more)

So it may not be too far in the future that we will at least be able to digitize the museum-going experience. I can’t imagine it would be too hard to take all of those digital models and build a multiplayer “video-game” that allows you to walk around, observe exhibits from all sides, and possibly even interact with other museum-goers. And if this technology works well, it seems reasonable to expect a lot of other “digital surrogates.”

Virtual Reality Has Already Been Here For a While

Nintendo's disastrous Virtual Boy had the silly glasses but was arguably way less "virtually real" than even its immediate contemporaries.

Virtual reality is often lumped in with jetpacks as an example of an anticipated technology that did not arrive when scheduled. I’ve always found this puzzling, because in my opinion we have VR and it keeps getting better. If you’re looking for VR, look no further than the ongoing flow of cutting-edge mainstream video games that continue to improve in terms of audio, visuals, tactile feedback, gestural interfaces, and social interactivity. But I suppose for many people it won’t be considered VR until silly glasses get involved, even though ultimately silly glasses may not even be the ideal way to achieve full immersion. I once heard it argued that even phone conversations can be thought of as primitive VR, and I think this perspective is essentially right. Progress in the field of VR has been alive and well for decades.

All Future Roads Lead to Problems With Intellectual Property

Technology is advancing on multiple fronts. Here’s a partial list of fields:

  1. biotechnology
  2. additive manufacturing (3D printing)
  3. nanotechnology
  4. virtual reality
  5. artificial intelligence

Once significantly advanced, any one of these technologies has the potential to fundamentally blur the line between ideas and physical objects. All of these technologies strive to take reality as we know it and “digitize” it into malleable information that we can then control.

Biotechnology seeks to make life itself programmable. Additive manufacturing and nanotechnology seek to treat physical goods like software. Virtual reality seeks to digitize full-fledged experiences. Artificial intelligence seeks to scan the measurable world and use all of this data to build reusable decision-making models.

So now let’s consider intellectual property. Fundamentally intellectual property is about assigning exclusive ownership over ideas. When we consider that increasingly we are using our technology to transform the whole world into “ideas”, one starts to see where the conflict arises. Few of us, I think, would want to live in a world where all of reality is subdivided, apportioned, and proprietarily owned (as if that sort of future would even be feasible).

Here is a short round up of links symptomatic of this underlying collision course between technology and intellectual property.

Potential Intersection of Virtual Reality, Intellectual Property, and DRM

Over the last couple decades, many goods have become digitized. Up until now, the primary targets of digitization have been media goods like music, movies, books, and video games. Once a good is digitized it becomes extremely easy to copy. This ease of copying has big economic consequences, since a proliferation of copies creates a near infinite supply and pulls down the market price of the good towards zero.

In order to save the value of their products, industries attempt to introduce artificial scarcity. They use intellectual property and digital rights management (DRM) to prevent copying, thereby ensuring a limited supply and an above-zero market price.

Because of rapid progress in 3D printing, many people are speculating that soon more tangible goods like tools, toys, and even instruments will effectively become digitized. This means that many new industries will increasingly lobby for artificial scarcity. For example, if you are a toy manufacturer, suddenly you will need to defend your intellectual property not only against overseas counterfeiting operations, but also against domestic consumers armed with desktop 3D printers and some cheap raw materials.

But we can take this thought experiment even further. Experiences represent another good that may soon become digitized. You purchase an experience when you go to a golf course, when you visit a museum, and when you go to a concert.

All that’s needed to digitize experiences is really good virtual reality. This already happens to a degree. We have golfing video games and live concert videos. Both of these technologies attempt to take an experience and compress it into a smaller, cheaper, and more portable form. However, this compression is far from lossless. A golfing video game does not capture the feeling of a 9-iron or the smell of grass. And a concert video does not provide 360 degrees of visuals or opportunities to meet other concert goers.

Improved virtual reality could potentially solve these problems. Granted some senses are easier to digitize than others. Our ability to digitize sound and visuals is far ahead of that for the other three senses. But just immersive sound and visuals have the potential to duplicate much of what is fun about a lot of experiences. Moreover, if the virtual space were shared and populated by other virtual reality users, than you could reproduce an important social component to many experiences.

Again, we see this sort of thing happening already, with video games on the leading edge. But while there’s nothing new about this idea, there is not a lot of discussion of the fact that virtual reality might increasingly compete economically with real experiences. For example, the music industry realizes it can’t make much money off of selling records any more, so they have started focusing on other revenue streams like live shows. And this works because right now I don’t think there are many fans who watch a youtube video of a band playing live and think “Great, now I don’t need to spend $25 and go see them.” But one can imagine that if virtual reality technology made a few large (but very conceivable) leaps forward, this equation might start to shift.

Keep in mind there are two steps to any digitization process: the scan/record step and the print/playback step. Both are critical. So when I talk about better virtual reality I am not just talking about the print/playback step—things like 3D goggles, surround sound, tactile feedback, etc. I am also talking about big advances in the scan/record part of the process. Advances that might make it possible to say, stroll through a theme park and surreptitiously record the experience itself. And I don’t just mean record the experience in a linear manner. I mean record enough salient details about the geography that a sufficiently advanced algorithm could then use that data to create a digital model of the park’s layout. Now imagine that as other people walk through the park, some of them are also recording and uploading details to help improve the quality of your model. Pretty soon you have a digital file somewhere that in some senses is a copy of the whole theme park, ready for illegal file sharing. The virtual theme park might be missing some details, like the smell of churros, but such deficits would be only a few technology cycles and software updates away from being corrected.

People who make it their business to charge for experiences are not going to take such developments lying down. They too, like the media industry before them, will likely turn to policies of artificial scarcity in order to prevent such unlicensed copying. Increasingly places might ask you to check your cell phones or other portable computers at the door, because that’s the only way they’ll know for sure that patrons are not illegally scanning the premises. More likely they will attempt a DRM solution, and use some sort of localized jamming device to try and cripple your logging equipment. Or they may—and this is the most concerning—try to expand the definition of intellectual property to cover experiences themselves.