1667: Pricing Homes in Different Commodities, When Will 3D Printed Homes Be Commercially Viable with Jarrett Gross

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your financial independence day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to episode 1667. 1667. Thank you for joining me today. So today we will continue our discussion on 3D printed homes. We will conclude it today and you can decide if it makes sense or it doesn't. However, on Monday's intro, I talked to you a little bit about. Compared to what? The most important question in life. Compared to what? And if we compare the price of real estate to various things, we can really understand if the price is high or low, whether it's expensive or cheap. So let's do that a little bit more today. If you were keeping your money, if you were storing your wealth in dollars, then the price of real estate has increased per pretty dramatically since the year 2000. So you look over the last 21 years and you think, wow, real estate is really expensive compared to the year 2000 and definitely compared to the year 2010. However. However, what happens if you had stored your wealth in gold rather than dollars? Well, in the year 2000, the median price home was $167,000. I'm rounding off, by the way. It's 167,550, but.167 good enough. It took 610 ounces of gold because gold back then was only $274 an ounce to buy the median price, 610 ounces. In the year 2010, the median price was $2.23 and gold was way up to $1,374 per ounce. So it took you 162 ounces to buy the median price home. How does that look today? Well, in dollars, home prices are way up. They're $356,000, but gold is $1712. So today it takes you 208 ounces of gold to buy the median price house. So what do we conclude? Well, in the last 21 years, houses are pretty much 2/3 cheaper than than they were 21 years ago if priced in gold. Just remember, no one forced any of us to denominate our wealth in dollars. We could have easily just denominated it in gold instead of dollars. And then we would think that real estate got a lot cheaper. Now it's more expensive than it was in 2010, coming out of the Great Recession, but it's much cheaper than it was before that 21 years ago in the year 2000. All right, well, how about if we take oil as a commodity? In 2000, oil was about 30 bucks a barrel and the median price, house, $167,500. So you would have had to trade 5,500 barrels of oil to buy a house. In 2010, that same house would have only cost you 2,500 barrels of oil. So the house got cheaper versus oil even though in dollars it was more expensive. The house was 223,000, but oil went up to $89 a barrel. So it got a lot cheaper denominated in barrels of oil. And in 2021, it's about the same as it was 21 years ago. Because oil at $66 a barrel and the house at $356,000 means you need 5,400 barrels of oil to buy a house. How about orange juice? What if you stored your wealth in orange juice futures, right?

I know not many of you did.

That in orange juice. Houses have become much more expensive because in 2000, orange juice was $92, right? And it would have taken 1821 pounds of orange juice to buy a house. But now it takes you about double that. In 2021, it will cost you 3200 pounds of orange juice to buy a house. Do you see how the compared to what question really matters? Let's do one last thing, one last comparison, and then we'll get to our guest and we'll talk about 3D printed homes. Let's talk about the food item that is the most widely consumed food food on earth that about 2/3 of the world's population relies on to eat. What is that? Of course, you know what I'm going to say it's rice. In 2000, it would take 29,000 pounds of rice to buy a house. Now it only takes just over 27,000.

So poor priced in rice homes are actually a little bit cheaper than they were 21 years ago. But let's just look at 2010 and the number we get there is when they when it was really cheap denominated in rice, it was only 17,000, just over £17,000. So you can really see that it depends how you look at it. And we always need to ask ourselves compared to what? And then the follow on question to that, is it cheap or expensive? Because if it's cheap, that means there's probably room to grow and see continued price increases. I'll continue to explore this question of is it cheap or is it expensive on future episodes. Now, I also want to remind you that it's not the price of the house that matters. It's the price of the monthly payment. It's the monthly cost that really matters more than anything else. Because the vast majority of people, of course, finance the house. They don't pay cash for the house. So we'll go into that one too on future episodes. If you'd like to check out our funding webinar, go to Jason hartman.com fund. We've also got several other webinars on some of our markets, like southwest Florida. A lot of opportunities in different markets. Check with our investment counselors and get the list of all the different web classes so that you can take advantage of those and learn about all of those. Anyway, I will sign off today from Tampa for the intro portion of the show. And I'm in Tampa through Friday and then headed back to Palm beach and then headed to another conference in Las Vegas for three days next week.

It is interesting.

We are starting to see things open up. Live conferences seem to be coming back, doing a lot of speaking at these different conferences. So the world maybe, maybe, just maybe is coming back to normal. We will see. All right, let's get to part two of three 3D printed houses. And let's go to our guest expert as we continue to discuss this important innovation in housing.

Just to go back to the cost thing for a moment. I know you've got a lot more to show us and can't wait to see it. You know, it seems, Jarrett, that really the barrier here on the cost is simply the cost of the actual materials and also getting the machines to do the job right, which they're not there yet, it sounds like not quite there.

I would say the machines are there. The material has a ways to go.

Okay, so it's the material, not the machine. You certainly save on labor cost and speed of construction. I mean, these can be printed very, very quickly. Basically, you can have one or two or maybe three people on site during the very fast construction process. Right?

Yeah, you need really at least two people generally Most companies have three. One for just watching, for safety purposes. Depending on the printer, maybe somebody needs to manage the concrete hose that's like a big heavy object that's swinging around the site. Sure, these things can be mitigated in the future, but the technology, the mechanics are quite impressive. They're not particularly complex, though. The motors and the engines are all reliable, and the machine is accurate to like, fraction of a centimeter. And so those things, it seems like all are doing really well. One thing maybe that could have improvement is the mixing of the material to the printhead. Maybe there's some room for innovation there.

But that one house that you showed us that had the walls that had the spackle on them, and they had to sort of fix the job the printer did, Was that a materials problem or a printer problem or both?

It was a combination of a material problem and an environment problem.

So they didn't tint the site. Right. And so the environment. Tell us about that.

So anytime you're printing outside, you're exposed to the elements like a regular construction site. But with the printing, the concrete isn't hard when it first comes out. So if there's excessive wind or rain pelting it, it can damage the poured or the concrete that's being printed. So many companies opt to build a structure around the printer, which is obviously a huge additional cost, but it improves the build quality and the line consistency. And when you have really even looking 3D printed lines, you can reasonably consider someone leaving that exposed in their home. Whereas if it's a sloppy line, that's not as easy for somebody to adapt.

Right. And of course, unless you put up drywall or do something, you know, if the walls are raw the way they were printed, you know, hanging pictures is going to be a drill and a screw. You know, a concrete drill, it's not going to be the traditional way with a hammer and a nail, of course. So a lot of differences here. And again, the whole point is speed and cost reduction. And if we've got a erect a tent around the site, you know, sort of. It's not quite there yet. Is there any point even in considering doing these in factories and assembling them on site? It seems like that would kind of defeat the purpose.

There are many people working on that, and some people will debate whether that's more or less valid for a small custom print like that fish we saw. It makes sense just to make that custom design in a facility where you can get really even lines.

Right.

For bigger things, like a whole home. Let's say a 1,000 square foot concrete home could weigh 40 to 80 tons.

Yeah.

Printer weighs maybe one or two tons, depending. It could be even half a ton if it's one of the smaller models. So transporting that printer to the site all of a sudden makes a lot more sense for a bigger object.

Right.

I agree with you. The tent is super expensive and a lot of extra work and printing off site and having to transport the materials, unless you're really close, that becomes a huge added expense.

Yeah. You know, It's a catch 22 because with the other concept in construction innovation, which is manufactured housing, you know, the kit homes that you can buy on Amazon, which those are a big myth too, in terms of the cheap cost. Don't be deceived. We're going to do a show on that, you know, but maybe it'll get there. You know, it's great to have the controlled environment of a factory. Right. You've got a lot of benefits with that. But again, the point of the 3D printing is you. You just set up the printer, which is light and easy. You know, some of these big printers for big jobs can be set up with two guys in just a few hours. It's not very complicated. And again, there's a big difference between the robotic arm, the gantry concept, and the rails. If you do it on rails, you've got to have that track be pretty level. And that's a big job to assemble that. But if you've got a big project for a subdivision, it might be worth it, right?

Yeah. And then maybe you can put those two guys watching the printer to work if the printer is operating smoothly.

Fair enough. Yeah, absolutely. Okay, go ahead.

A lot of my favorite 3D printed houses incorporate different materials, like the Ashen Cabin in Cornell and the these houses by icon 3D printing. It's cool. But to make a whole house that's entirely printed and expect somebody to just live in this entirely new concept, I think that's a little bit of stretch. It'll take some warming up. There's all different types of houses, and one of the questions you were asking earlier is like, when are we going to see this take over the industry? I think we will see it take over its section of the industry. There's never going to be just one model of house that people want to buy because people come in, all their opinions are as diverse as anything else in the world.

Sure.

And maybe a small fraction of the homes, the many, many billions of homes that are around the world, maybe a billion. I don't know, but if a small fraction ends up being printed, then this will be a very successful industry. To get there, I think it'll take projects like this that are partially printed and then partially using traditional construction methods. So this is icon's printer. You just saw the Vulcan printer. And these are the four homes that they printed. The first floor of each home is printed in the concrete. They have their own proprietary mixture they call lavacrete. They refer to it sometimes as magma, I guess. And the lines you can see are very, very clean, distant. The second floors of the house are built with traditional construction. You see the zip sheath on the exterior. That's extremely common here in Texas. Pretty much every house has a zip sheet. The printed concrete, it's very strong. It has like a 6000 psi strength, if it's the same one they were using last time. And that's more than enough to support the second floor of this House.

Is the second floor not 3D printed because of the height of the printer limitation, the printer head, or is it just the weight? It would just be so heavy by the time you got to the second story that the first story couldn't support the weight of that additional concrete.

For the ICON project, their Vulcan printer only goes high enough to do one floor.

Okay.

I would imagine that they're planning on raising that limitation, unless they've just become so focused on their NASA contracts that construction is like an afterthought for them, which sometimes it seems that way.

And by the way, why don't you tell us about the space application for 3D printing?

Yeah, sure. So space construction is really unique because until you build something, you can't necessarily have people outside in the moon, you can, because there's no radiation. But on Mars specifically, there's a lot of harmful radiation on the surface of the of Mars. So coming up with a concept where you can build without people on site is very appealing for extraterrestrial exploration. Exploration, yeah.

And so with the Mars application, we really are talking interplanetary here, folks. So, you know, this is. This is the future. They would do a whole different concept there where they would potentially do these sort of inflatable structures and use the Martian Earth around them. Right. To insulate from radiation, or tell us about that a little bit. I mean, just quickly, you know.

Yeah, that's a concept I've seen. The Mars soil is called regolith. And so they're experimenting with how to manipulate the regolith soil to be printable or malleable for construction. The one you're referring to was a project maybe space AI or something like that, where they had a kind of army of smaller robots pushing the soil up over domed like air bubble or something. I don't see that as such a realistic solution because Elon Musk has the boring company which is so effective at digging underground. And if you're going to just create a cave above ground, you may as well just create the cave underground. We'll see what ends up happening with that.

We'll see. Okay.

Yeah. So here's a recent project by, it's designed by Mensa Corte, which is an architecture firm in Germany using a cobot.

That's in Germany, right? That actual house.

Yes.

Yeah.

And.

Is the first German house to be fully permitted for occupancy. Right. It's 3D printed, right.

It's permitted for construction. I don't think they finished it. So the certificate of occupancy is probably pending.

Okay, well they got the permits to do it.

So yeah, just like icon and SQ40 also have permits for their construction. So this is the assembly of the COBOD printer. This one takes a little more than two guys, but they're able to assemble it in eight hours, disassemble it in eight hours. This house is really unique. I call it the most innovative 3D printed house in the world. Because Mensa Corte they really got a deep understanding of the capabilities of the concrete printer they're using. And they considered a bunch of little details and they brought like the German engineering into 3D printed construction. You can see like close up, right? There was a small metal flap. So when they want to have a gap for either electric or H vac, plumbing, whatever, the printer stops its print. And after a few layers, when the gap is big enough, they just place the metal sheet over it and the printer is able to just go right over that. Like it's a typical layer. So the human intervention, I mean it's there certainly, but it's not hard labor like you typically see on a construction site with heavy equipment back breaking effort. This is just placing small objects in where they belong. Like it looks so simple.

Yeah, it does, it does. And for those of you not seeing this, you know, if you're just listening to the audio only version of this, of course, check out the video on our YouTube channel or the other censorship free channels we're on as well, like Bitchute Rumble. It's pretty remarkable. You know, the machine prints the house, they put in a few pieces of metal for power outlets, switches, etc. Pretty amazing.

Yeah. This House also has some other physical features inside that are printed. They have a printed bathtub. They have a printed fireplace. You can see here is the ICF ceiling that they're dropping in. You were mentioning concrete ceilings. So there's a picture further along where you can see how neat and organized all the plumbing and everything is on the roof. It's incredible.

Leave it to the Germans. They're the perfectionist engineers for sure. But, you know, that's the thing. People have to understand. There's a lot more to a house than just the superstructure. There's the plumbing, the electrical. There's, you know, all of this other stuff. And that stuff can't be 3D printed. It's not like anybody can 3D print an entire house.

Yeah, that stuff certainly is not being 3D printed right now. But with all the companies printing metal and plastics and other materials, I don't think it's so hard to imagine that when the concrete walls are, like, at the nth level of maturity, then people will start dedicating their efforts in 3D printing to these other subcontractors.

Right to the smaller items. Yeah, that makes perfect sense. Sum this up for us if you would, Jarrett. I mean, how far are we away if, you know, if you can take a guess, make a prediction from seeing commercially viable 3D printed homes. And, you know, when we get there, will they be less expensive? How much less expensive might they be? I mean, nobody really knows for sure. But so far we're just hearing a lot of big claims that just aren't realistic.

Yeah, that's a really good question. And the answer is complicated. So economically viable homes. It's, I think, likely that the homes printed by sq4d and icon, I believe they'll turn a profit on those. It's a unique situation because they're the ones that developed the printer. And so they're not factoring in all of their development costs and such. But they also don't have the upfront cost of the printer and whatever premium they end up charging on the materials. So is it economically viable for somebody to just jump in and make themselves print one home? No, that's not even really possible right now. Because you can't get a printer to just print one home. There's so few of them around that if you could rent one, it would be some exorbitant fee. And so it's not really economically viable for the average citizen at the moment. Now, if somebody had a big enough wallet and they wanted to do a project of 100 homes with that Economies of scale. If they were able to secure materials at a large batch size for a reasonable price, then they could end up having a profitable project. If they bring that scale. That could be possible right now, but because it hasn't been done, can neither be confirmed nor denied.

And as. That's a good answer. And as you know, we spent a lot of time last week talking with one of the printer manufacturers, and, you know, I got really interested in thinking I should just buy a printer, start a construction company, buy a printer, start printing affordable housing. But again, there are several hurdles left before we get there, I think. Right.

Yeah. I mean, if you're deciding between a concrete 3D printer and GameStop stock, then maybe the printer. I don't know. I'm not a real server, but it certainly isn't a guarantee.

Yeah, no, it's definitely not that. Anything else you want to talk about, you know, or any. Any more answer to my sort of big compound question I asked you about, you know, what's next and cost and anything more there?

I'd like to ask you what you think the implications would be on the economy and real estate if all of a sudden the material cost decreased and the construction of a typical home could be 50% cheaper for 3D printing.

Well, I think, number one, that would increase the price of land because suddenly there would be a surge in demand for land because if the construction is now cheaper and also people would build better houses, they would make them bigger, they would make them better, and they would use that extra available capital to do something nicer. And, you know, hopefully it could make a dent in the homelessness problem. You know, there's a lot of ways to make a dent in that. Now that just don't happen. I mean, there are all sorts of shopping centers and big box retail stores that are completely empty. That could be homeless shelters. And there's all kinds of solutions. So it's not like there's a shortage of available space or anything. But it's a complex question because, you know, there's two components in every real estate deal, right? There's the land cost and the structural cost. So if the structural cost became less expensive, that would open up a lot of opportunities. I think it would make the land cost go up on balance, because there'd be more demand. And what would happen to the traditional construction industry? Would there be, you know, massive displacement of jobs and would the unemployment rate increase? I mean, this is the question with all sorts of automation, not just 3D printing, you know, automated cars and autonomous vehicles and so Forth because transportation is like the world's biggest industry, you know, and if drivers were put out of business, whether they be Uber taxi, ups, drone, delivery of packages, there's just huge questions there as to what will happen. But so far, the interesting thing about that displacement of the human capital is that there's always been an adjustment period that maybe takes a couple of years for people to adjust and retool for different types of jobs. And if you look at the census data for the types of occupations that have disappeared over the last 50 or 100 years, there's really only one that has gone away. Elevator operator. We do the do it yourself elevator thing now. We push our own buttons in the elevator. Right. So that job has gone away, but all the other jobs are pretty much still there. And I don't know, I think it's a pipe dream to imagine that someone driving a UPS truck can become a coder and adapt to, you know, new technology. I'm not sure it's a very big question.

Maybe this time those little sheets on the concrete like we saw.

Right, but how many of those people do you need? Right. Not that many. Right. If I look at homes under construction nowadays, there's a whole bunch of trades and a whole bunch of people. And those trades, a lot of those won't go away with 3D printing. They'll still need people to put pipes in. Granted, yes, you can 3D print plastic, but I don't know. You know, it's a very tough question to answer.

I think that it's different from driving like the automation of trucking in that industry, Uber, because the infrastructure for those vehicles, like all those Teslas, could just get a software update if full self driving was legalized and ready and then it's instantly available nationwide. Whereas these printers, there's like at least a four month lead time if you want to buy one. And it requires a huge capital cost. There aren't any financing programs. So it's going to be very gradual. And then also it's not all encompassing industry. Like they can't build anything that big yet. They can't build any skyscrapers, they can't do like huge industrial complexes or warehouses. So I don't think that job displacement is ever going to be a threat for this industry, especially considering the dwindling workforce in the construction labor field. Most people are in their like 40s or 50s that are doing construction labor and that's just not sustainable.

Yeah, no, that, that's true. We definitely have a graying of America and an aging population and so with that said, you know, a lot of those people cannot do construction jobs. Yeah. It's a very interesting industry. And, you know, we'll see what comes of it. Wrap it all up for us. Give out your website. Really just want to say thank you for being on the show.

Yeah, thank you for having me. You can check out my website at Automate Construction. That confuses people because there's no dot com or anything. Maybe I should reconsider that domain. But if you'd like to also check out the houses, the 3D printed houses I've been touring, you can check out my YouTube channel. It's just my name, Jarrett Gross, on YouTube. And then feel free to leave a comment if you have any questions about a video or anything. Looking forward to hearing what anyone has to say.

All right, people, we'll keep you updated. And Jarrett, thank you so much for joining us. We really appreciate having you.

Thanks again, Jason. Keep in touch.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the show's specific website and our general website, hartmanmedia.com for appropriate disclaimer and terms of service. Remember that guest opinions are their own, and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to itunes or Stitcher radio or whatever platform you're using and write a review for the show. We would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.