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I cannot agree with this statement “...This is unnatural, since a home does not spontaneously renovate itself, get bigger, or otherwise increase in inherent value...” . Don’t forget the most important factors for home pricing: “location, location, location”. If the neighborhood becomes trendy and developed then all the housing there increases in value. This value can be reflected in the rents that people agree to pay.
A much stronger disruption could come from self driving cars. Suddenly I can afford to live an extra half-an-hour driving distance away. Remoting and WFH is not affecting the prices much.


Hi Kartik,
There are more costs to a mortgage – it is estimation and the risk of default/foreclosure, mortgage and bank agents. Legal paperwork, etc...
Securitization of the mortgage pool and selling it on the market has to be factored in too. And CMO/MBOs are not risk free. There is low but systematic risk in case the markets take a dive.
One big problem is that homes are not standard and equal. Even sales agents have no firm idea how much a house can be sold for. If only there was a way to short sale houses. That would actually bring some very interesting dynamics. Especially if a big player can borrow money close to LIBOR or some other interbank/prime rate.

Kartik Gada


Don’t forget the most important factors for home pricing: “location, location, location”. If the neighborhood becomes trendy and developed then all the housing there increases in value.

That is akin to when people thought gold would always rise in value under the assumption the supply is fixed.

Real Estate supply can always be increased, and in many cases they obstruct new construction (despite market forces demanding it), just to prop up the value of existing supply. That is just as immoral as the DeBeers cartel.

But the asset itself is a depreciating asset. Not the land, but the structure.


Fascinating article.

However, I'm skeptical that reducing the price of loans would foment any loosening of the restrictions that make housing so costly in the first place. If anything, it'd would do the opposite. A lower price for loans just means people can bid up housing prices that much more.

What's needed for housing is an Uber-style solution of building a devoted popular following despite being illegal. But that's obviously much harder if not impossible to do with stationary buildings than fleeting cars that already exist. A good start would be tech billionaires simply caring about high housing prices for their employees. High housing prices and low housing supply in the Bay Area is holding back everything you write about, bit by bit.

Kartik Gada


The lower interest rates will initially increase home prices, but then (just like with oil before it), the high prices create pressure for more construction, and more technological disruption in construction which then exerts even more pressure on cartelized zoning restrictions to increase supply. The Bay Area is the worst in this regard, as there is no shortage of land (see all the empty parking lots and 1-story strip malls). Everything is about artificially restricting supply.

Yes, tech companies not caring about housing costs for their employees is a surprising blind spot.


There is something else that bothers me. The home renovation is very hard to automate. Yes, you can have fancy cordless power tools and advanced painting rolls. But in essence it is highly specific and labor intensive. Sometimes it is ridiculous. Like the price to install a water heater tank is comparable to the cheapest models. Same applies to kitchen and bathrooms. If only everything was standardized and modular, then renovating the bathroom would be like choosing the options for layout 236 from the factory…

Kartik Gada


That is partly true. But remember that a) there are tons of DIY videos on YouTube now, and b) Craigslist makes available lightly-used items for what is often an 80% discount.

The things that are most resistant to the ATOM are things that women require for emotional reasons. Hence, the disruption shifts higher up in the pyramid..


Hey, Kartik. In a previous comment here, you wrote:

"The things that are most resistant to the ATOM are things that women require for emotional reasons. Hence, the disruption shifts higher up in the pyramid."

I would love to see more from you about this - perhaps some examples.

Kartik Gada


Well, read Imran's article, The Misandry Bubble :


It is simply the most famous anti-feminist article ever written.


Re - remodeling - you are exactly right - things are not very standardized, or rather they are standardized around standards that are silly, overly complicated, and time consuming.

However. Even in the staid business of home building and remodeling, the world is advancing. More and more faucets are "plug and play" connectors, that take minutes to install (I just did one last week in 15 minutes for the same faucet that took me 2 hours to do last time it failed. Looking at it - it simply had much better design than the old one, with fewer connectors and fussiness). PEX tubing, shark bite fittings. Certainly plumbing is becoming faster and easier to do.

I redid my entire kitchen with IKEA cabinets a child could assemble. Pergo style flooring is fairly easy to do masterfully with minimal tools.

Electrical has been pretty simple for a while now - but I would argue LED lights mean a lot less maintenance and more simplicity. The time I spend on a ladder fusing with bad light has dropped close to zero with LEDs.

Which leads to another point - improved building materials. I installed TREX plastic wood hybrid decking in 1999 and it still looks like a million bucks. Any other decking I would have had to strip and stain at least once, if not twice, by now. Home materials have improved enormously.

I replaced all my windows with custom vinyl windows - the custom windows cost only 10% more than off the shelf thanks to robotic manufacturing, and were delivered to my door in a couple of weeks. Pop the old out, pop the new in - a one person weekend job (admittedly it took me a few weeks - I only had time to do 1-2 windows a week).

Anyway, there has been a vast improvement in the quality, price, and ease of doing home remodeling, or so I have observed over the last 30 years or so. I certainly keep expanding the scope of projects I am willing to tackle, without necessarily expanding my tool set, or skill set.


"The things that are most resistant to the ATOM are things that women require for emotional reasons. Hence, the disruption shifts higher up in the pyramid."

How could one profit from this?

Kartik Gada


1) Make Money : Sell products that cater to this trend. '50 Shades of Grey' is a disgusting book with grammatical errors (I am told). The author (a woman) has made $300M and counting. More respectable products that cater to women are also high margin. Basically, anything that tells women what they want to hear or generates that feeling. If you want to use ATOM principles, 3D Printed jewelry is an example.

2) Reduce costs : Learn Game (see the Misandry Bubble).


For the medical field.


M Simon

There is currently a design for a printed house costing $10,000 complete (electrical, plumbing, HVAC) for 400 sq ft. That is $25 per sq ft.

Think of what that will do to the value of existing houses.

And of course we are only at the beginning.

Zoning regulations are price supports for real estate incumbents.

Kartik Gada

M. Simon,

Yes, that would be a major disruption, and is one of the most overdue disruptions.

What if I told you that since 1980, US manufacturing productivity rose by 220% (so 1 became 3.20), while US construction productivity *fell* by 25% (so 1 became 0.75).

Corruption across zoning, organized crime, and even self-serving 'owners' (i.e. mortgageholders still making payments) all combine to block the innovation. Renters/young people don't have anywhere near the political power to be catered to in this regard.

New innovations continue to be obstructed. The disruption is still a ways away (but will be very sharp when it happens).

M Simon

Kartik Gada | March 15, 2017 at 11:17 PM

'50 Shades' inadvertently showed women's true nature (the desire to be dominated by a strong man). It in fact supports "Game". Despite all its defects I would not be so down on it. It is a big hole in the female narrative (armor). That it was written by a female - all the better.

BTW I first learned the rudiments of Game from my first girlfriend in '62. I had just turned 18. I have never met or read such a self aware woman since. Funny enough I was one of her plates. I cried when we broke up, but in retrospect the education was priceless.

Jason K.

Being pedantic; you never really own your home as you lease the land from the government through property taxes. Pedantry aside, lowering the interest rates will boost home prices, especially in high demand areas. This is because most people buy about as much house as they can afford the mortgage payment for. It is clear that there are massive distortions in the construction market. When my parents had a house built a couple years ago, they couldn’t even get a copy of the plans from the architect. The only way for them to make sure things were being done as requested was to physically be there during the construction process. There is no reason that the plans couldn’t have been imported into CAD software and be used to generate a 3D walkthrough. Talk about a lack of transparency. At this point, we probably could merge CAD with augmented reality and give construction people visual overlays of where everything should go, thus removing many coordination/implementation problems.

I think we will find median house prices remarkably resistant to technological improvements, because house size/quality is a status symbol. Additionally, as the costs of lower marginal utility goods collapse, more and more money will be poured into higher marginal utility goods; goods that produce emotional satisfaction. As emotional satisfaction is relativistic in nature (you constantly adjust to current state, thus requiring more to achieve the same effect), it is an endless treadmill to spend money on.

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