Home Construction Is Undergoing a Revolution. Here’s How Investors Will Benefit.

Imagine hitting “print” on your laptop and firing up a robot to manufacture a livable home. That outrageous scenario seems pulled from a sci-fi movie, but it’s being utilized today and could transform the housing market. 

Human labor is one issue facing an undersupplied housing market. Enter 3D printer robots, which funnel concrete through a specially designed hose in concentric patterns according to a programmed floor plan to build a new home’s outer and inner shells, dramatically shaving construction costs from conventionally built homes.

With the housing market short of around 7 million homes, multiple 3D printing construction companies such as Alquist 3D, Apis Cor, Icon, and CyBe Construction are transforming the methodology and timescale used for homebuilding. Because 3D-printed homes are built with concrete, they are naturally hurricane– and earthquake-resistant, compliant with international building codes, and up to 30% cheaper to build than traditionally built houses.

During construction, metal concrete reinforcement is added every 10th layer for strength, serving a similar purpose to rebar. Unlike human labor, a robot doesn’t get tired, works continuously, and can build the outer structure of a 1,300-square-foot home in about 40 hours. Not surprisingly, the 3D printing construction industry is forecasted to generate total revenues of $40 billion by 2027. 

A Streamlined Operation

3D-printed houses will significantly affect the much-needed affordable housing sector of residential real estate, with Habitat for Humanity already using the technology to mass-produce housing. Other benefits include cleaner job sites with less waste and higher energy efficiency due to concrete construction.

With a shortage of construction workers, 3D printing only requires one or two people at a time to oversee operations. Synthetic concrete using recycled glass with solar-paneled roofs means that 3D-printed homes could be energy neutral, producing as much energy as they use.

National Homebuilders Are Embracing the Technology

Building homes using the new technology flies in the face of conventional lumber-based housing, which has been used in the U.S. for the last century. This means convincing the construction industry to switch its tried-and-trusted building practices for a revolutionary new approach could take time. 

Much of it relies on national homebuilders coming on board. To that point, a new 3D housing community, comprising 100 homes constructed by Icon and national homebuilder Lennar, is taking shape north of Austin, Texas, and gaining much attention. 

“In the future, I believe robots and drones will build entire neighborhoods, towns, and cities, and we’ll look back at Lennar’s Wolf Ranch community as the place where robotic construction at scale began,” Icon CEO Jason Ballard said in a statement.

How 3D-Printed Homes Will Affect Real Estate Investing

All of this sounds great. But what does it mean to real estate investors? Here are four considerations.

1. In warmer climates, 3D homes may prove more popular than conventional homes

It may take a while to get used to the circular layers of concrete patterning inside and outside your home, which, when painted, resembles cake frosting, not cement. However, as more homes are constructed this way for less money and less energy costs, it’s hard to see how they won’t catch on.

For investors who want to become developers, this lowers the barrier to entry. Robots also show up on time for work and don’t demand to be paid in cash weekly. As a result, traditional homes needing renovation could get demolished in favor of new 3D homes, decimating the fix-and-flip investing model.

2. Build-to-rent communities could sprout up from developers

It’s easy to visualize hundreds of robots drawing 3D house-shaped patterns across the landscape, transforming lots into communities in days and weeks rather than months, as with the Icon/Lennar development in Texas. With interest rates high and affordability low, this could transform development and rental housing in the U.S. for years to come, ending the housing shortage and making homes more affordable—savings that could be passed on to homeowners and tenants alike.

3. Less reliance on overseas lumber and building materials

The supply chain has been a significant impediment to construction costs since the pandemic. With problems at the Suez Canal causing issues again, America and the West need to curtail their reliance on shipping freight. So long as the construction industry can figure out how to sustainably source sand used in concrete by recycling glass instead of relying on the pricey transportation of sand across continents, 3D printing could signal the end of overreliance on the supply chain for materials, thus stabilizing construction costs. 

4. Tiny homes and ADUs will flourish, becoming a boon for vacation rentals 

With new laws green-lighting the use of accessory dwelling units (ADUs), their mass production at an affordable price has taken on a new importance. In this respect, 3D printing could be a game changer. 

It’s estimated that a robotically manufactured ADU could be completed in as little as two weeks at a cost of below $15,000. This means that many homeowners can own vacation rentals in their backyards or extra lots to boost their income. Additionally, investors could buy land to build tiny houses on for instant passive income from STRs.

Final Thoughts

Given the technological advances, it seemed inevitable that robots would soon be building homes as they do cars. The use of concrete is perfectly timed due to the increase in extreme weather events. Concrete homes could bring down insurance costs, which would be a big plus for investors in weather-ravaged places like Florida. 

The speed and cost savings in construction could help transform real estate investing, making houses more affordable and easier to build en masse. An obvious casualty for investors would be flipping and wholesaling, as the next wave of homes would be new and probably sold directly by the homebuilder. 

This type of construction also favors large-scale homebuilders who can afford the technology. The minimal framing, house wrap, and siding means many jobs within the construction industry will be lost, and small-time contractors and flippers will eventually see a downturn in revenue. However, roofs, plumbing, and electrical are still traditionally installed, and those trades might see an uptick in business with the mass production of homes.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.