I bought an autopilot Tesla - this is going to affect real estate prices - but how?

So I thought I’d share this with the community and get some input with other people’s predictions.

About 10 days ago I took delivery of a 2016 Tesla Model S with the self driving autopilot. If you don’t live in a clogged metro area this tech may not add value to your life - but to those of us in places like Southern California it is life changing.

You have to experience this tech to appreciate what a paradigm shift it will have on your driving habits and your willingness to drive long distances more frequently - and while only about 50,000 cars in the U.S. have these functional autopilots today, the tech will be in almost every mid range car from every automaker in 36 months.

Today I drove (actually the Tesla drove and I sat there relaxing with my hands in my lap the whole time) 2.5 hours through rush hour traffic at slow speeds I normally would not endure - I simply wouldn’t have made the trip. BUT IT WAS BLISS. Not to mention the fact that the car gets the equivalent of 100 mpg, so the trip cost almost nothing in fuel compared to my old 14 mpg 91 octane guzzler.

I see this tech as having an impact on home buyer behavior in every part of the U.S. where you have bedroom communities full of homeowners who commute into more expensive urban areas for work.

What is the impact? The impact is people will be more willing to drive a long way to/from work to have a larger home - thus shifting the demand curve for bedroom community real estate to the right.

If this effect indeed happens, then suburban real estate prices will rise (at least for a time, until home supply catches up, or the freeways become so clogged with autopilot cars that commutes become intolerable even with autopilot) - and the price differential between pad rent in MHP’s located along commuter corridors and apartment/SFH rent will increase.

If this price delta indeed increases, MHP owners should benefit because they can increase their rents while still maintaining the “low price advantage” over local apartments.

My predictions on the magnitude of these effects may be wrong - but they are coming, and sooner than almost anyone realizes except those few who have driven these cars. You cannot appreciate how much more pleasant driving is when you can relax until you have actually driven one of these machines. The rest of the public is going to realize it very soon.

Tesla is unveiling the $35K Model 3 in less than 10 days and accepting orders for 2017 deliveries - most likely they will announce that it will come with 2nd generation autonomous hardware. The rest of the auto industry will be forced to match forces and very soon all of America will be sitting with their hands in their laps.

Any other thoughts on how this will affect real estate? Disagree?

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People live where they live based on time and money. Autopilot alone does not give people additional time (or measured as productivity / efficiency) at work, so until Tesla introduces an office on wheels and corporate culture is more acceptable of work in transit this isn’t a game changer. This is just a personalized bus ride.

I’m glad it reduces stress and maybe people can get a bigger home living further out, but they will have to exchange that for less time with their families or other priorities. We’re not there yet. Still a long way off at a national level and regulatory hoops in every state.

Short answer: no effect on MHP’s for at least 20 years, probably none ever.

Brandon knows it isn’t spam because as the moderator he can see which e-mail addresses are linked to which real names - and knows who has been to his boot camps.

In any case it isn’t spam and Elon Musk doesn’t need anyone to “push Tesla” on an obscure Mobile Home investing site lol. :smirk:

As for tax policy I’m not here to have a political debate - merely to theorize about what may be a large effect on commuting patterns.

If you read what I wrote - the point isn’t about Tesla. The point is that this tech is coming for everyone very soon - Mercedes ships an autopilot in less than 90 days in the 2017 E-class. Honda has a limited version currently on sale in the new Civic. GM just spent one billion dollars to purchase Kyle Vogt’s Cruise Automation - a 40 person autonomous driving startup run by an MIT engineering grad. Volvo is shipping a limited autopilot in its 2017 models. Etc. etc. etc.

I grew up in the Inland Empire of California - bedroom communities in which people commute 1/2/3 hours each way to get to L.A. and Orange County and still afford a home.

But not everyone chooses to do that of course because commuting in traffic is extremely unpleasant - largely due to the mental concentration required which is tiring.

My hypothesis is that as soon as everyone has an autopilot car that eliminates much of the pain of commuting, many more people will make the decision to move further into the suburbs where they can get cheaper housing. This of course increases housing demand along those commuting freeway corridors and could push prices higher.

jhutson deleted his post but I read it first - he countered by saying that if you still have to look at the road you are not gaining time. This is true - however I have now listened to several of Frank’s shows while chilling in the car as it drove itself and I took notes on Frank’s thoughts, asked him questions, etc.

In any case regardless of gained time for increased productivity (good point jhutson) the current generation of autopilots do at least eliminate the frustration of driving long distances in traffic.

As to how big (or not) an effect this will have on housing prices I guess we will all find out in the coming years. Jhutson predicted no effect whatsoever on MHP prices for at least 20 years if ever.

This is actually a concept that I have been thinking about for a long time – although not entirely from a mobile home park perspective.

Here’s my opinion of what’s going to happen with the addition of the self-driving car. Those who commute and hate it will start to like it, and their cars will become like recreation rooms in which people put all their favorite reading materials and movies to watch, plus the occasional nap. The bottom line is that the daily commute will become something that is looked forward to, and not dreaded. As a result, people will become happier with slightly longer commutes (I can see an hour becoming a good benchmark).

Because of this new vision of an hour being a daily happy time, instead of a tense, annoying part of life, people will press farther out in search of areas that are 100% free of crime and poverty, and where they can get incredibly good buys on housing. Those who cannot afford to buy self-driving cars and gasoline (or electricity) will be stuck inside the current city footprint. Housing starts and prices will go up in these 1-hour commute areas, while housing prices and demand will go down in the current suburbs.

I call this effect “Exo-Suburbia”. I am very interested in it because I live an hour south of St. Louis, yet 50% of my town works in the city. We are already seeing more and more St. Louis residents moving down here, some trying to beat the rush in property values before the self-driving car creates the demand for longer commutes. Self-driving cars are a much-discussed topic down here.

I am confident that the self-driving car will indeed increase park values in any market that is a longer commute from the city. In fact, it will change our lives in many, many ways that nobody has yet forecast, just as the internet has permanently changed everything from shopping to newspapers.

As far as time, I think that you will see this effect much faster than anyone imagines. Why? Because it will be the greatest one-time car selling opportunity in history – “trade in your old car for a self-driving one”. And these cars all have higher price points with much greater profit for the dealers. The self-driving Chevette will come last, or maybe not at all. This one shift could be the savior of the auto industry, which has been getting hammered by young people who are foregoing cars to ride in Uber and Lyft.

I will also add that I saw an article recently on this very concept, written from the opposite perspective. That writer thought that the self-driving car will be a disaster for rich/poor equality, as it will allow riders to “escape” the city altogether, and exclude everyone who is not rich from their “world”. The city and its troubles will be something that you watch as your car drives by – or that you nap through. The article proposed that our nation take the bull by the horns and start exporting poverty to these outlying suburbs in the form of Section 8 apartments, so that we don’t live in a polarized society.

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I wasn’t sure if the post was real or not, but thought the concept in general was interesting which is why I responded. I hope the uptake happens fast, and think California will set a good model for everyone to improve upon reflecting their local interests.

I am pessimistic with how the government will handle this - and have some concerns about security and hackers causing coordinated pile ups. Different thread for discussion, but fun topic.

@Ivan_ilych , as per your post:

  • “I bought an autopilot Tesla - this is going to affect real estate prices - but how?”

This is an interesting post.

First of all I would like to say that I completely respect those who are Innovators.

However, I have great fear and trepidation concerning any vehicle that is “self driving” or has computer generated driving features such as auto stop.

Two of my previous jobs before Mobile Home Park Land were finding “Bugs” in Computer Software for NASDAQ Companies.

When I first interviewed for the position of Computer Software Quality Assurance Analyst I naively asked the question:

  • “When does the ‘Computer Software Bug Count’ go down to zero?”

The Managers of the Computer Software Quality Assurance Department chuckled a bit and then explained that the “Computer Software Bug Count” never goes to zero. Some ‘Critical’ & ‘Major’ Bugs will be fixed, but in those software patches or new builds there will be new Bugs that will be introduced. It is a revolving door of “Bugs”, “Bug Fixes” and “More Bugs”.

The Computer Software that I worked on was not life and death.

However, Computer Software in a car is a “life or death” issue.

Computer Software is created by humans.

No human is perfect…we all have flaws and make mistakes.

The issue arises when flawed software (made by flawed people) is used in a vehicle that can quickly turn a joy ride into a weapon.

I also agree with @jhutson:

  • “…and have some concerns about security and hackers causing coordinated pile ups.”
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As the official referee of the Forum, I am going to have to throw some flags and call some technical fouls on this thread. I know that some people got the wrong first impression here, but the facts are:

  1. @Ivan_ilych is a legitimate Forum poster, Boot Camp alumni, and a very smart guy. He was not in any way trying to promote Tesla.

  2. This is a topic that Frank has talked about several times in the past, and is a legitimate one.

  3. We need to knock off the negative postings on here, or we’re no better than all the other Forums on the internet.

So I would personally like to apologize on the behalf of all the good people who post on here to @Ivan_ilych for putting a really interesting topic out there for discussion. And I have deleted the negative comments so they are not attached to the thread for posterity.

Now don’t make me throw any more penalty flags, OK, or I may throw everybody out of the game!

Brandon Reynolds
President
Mobile Home University

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Tesla is going to double the value of mobile home parks!

Tesla is the very epitome of corporate welfare. They receive BILLIONS in subsidies that come from the backs of hard working taxpayers in return for MILLIONS they pay to politicians. This is a fact, not an opinion - look it up.

Tesla is the next Solyndra https://en.wikipedia.org/wiki/Solyndra Another company that was not profitable and survived off of the backs of hard working people. They received $500,000,000 from the taxpayers in return for a few million in donations to Obama. Great deal for them for sure. Then they went bankrupt.

Fact is that the argument that very high end cars will increase the value of MHP’s is absurd.

I think it is an interesting question how MHP’s react in general to changes in the local rental market. Where is the demand for “affordable housing” going to be in 10 years or 20? Still huge. But in which markets exactly? Who knows.!

So where does that leave you as an investor?

A MHP can be “renovated” for different economic client bases in a way that is economically more flexible – I would argue the homes are easier to “upgrade” than apartments.

I would also argue slower to “downgrade” since management can do something about it unlike SFR neighborhoods.

Brandon@Sandell

From the many different enterprises we have and are in presently the biggest change as to mhp’s GOVERNMENT!!! Our present demographics for the first time in 80 years is actually net poorer than any time and thus there ability to consume and drive up the GDP is decreasing . Thus cheap and cheaper housing needed plus tremendous increase in government aided housing projects like section 8 housing in nice communities so the children can experience what the smaller middle class enjoy!!! The voters presently have ability to vote in taxes that affect especially the middle class since the very wealthy enjoy the lobbyist and there ilk to help people like Buffett pay a lower percentage of taxes than his secretaries. Mr. Sanders has a plan for any wealth you might have and his fan club is not pro-capitalism–listen closely to their dialog and I feel my hard earned money being assaulted plus almost all of both political parties. Mhp’s of some form will continue but the controls will be totally different.