We need to be mindful of major trends that are taking place.
A few decades ago we saw globalization really kick into high gear. Part of this shift was in manufacturing. What happened was we saw high cost areas push their manufacturing overseas to lower cost areas. Effectively, this allowed those countries to export their deflation, flooding the global market with inexpensive goods.
While this was a boom for consumers and corporations, it was not a windfall for the workers. We know how ill-served they were by this move. Nevertheless, it took place and, in spite of effort to reverse it, this is now standard operating procedure.
The question is are we about to see the globalization of real estate?
It is something worth considering.
For the last 70 years, the urban areas saw a bubble forming that was forced by artificial means. Due to the near monopoly of well paying jobs, the migration from rural to urban areas happened in droves. Tens of millions of people in the United States alone (hundreds of millions globally) did this migration in hopes of a better future.
This also led expansion outward as suburbs became an alternative for those who preferred something different than city life.
Of course, there was only a matter of how far out one could go since the near monopoly on jobs existed. When you look at the population of the United State, an overwhelming percentage lives within a 75 mile radius of a major city.
Here we see one of the reasons that, no matter what happened, cities always seemed to bounce back. Regardless of how bad a recession was or how much real estate got hit, cities always returned to their previous state. In fact, they expanded and grew.
We might be seeing the end of this era. Do not forget, what is being described here only occurred over the last 100 years. Before that, most people lived in rural areas.
The question is now jobs. We could be witnessing a transformation as the work-from-home idea takes hold. If this is truly a movement, we could be seeing a radical shift taking place.
There is little doubt that our world is getting more digital. We are seeing more being done online, which leaves less to operate in the physical world. Certainly there is still a lot that is resident there. However, many of the jobs created in the last couple decades focus upon the digital realm.
We even see this within cryptocurrency. How many people, even in these early stages, are able to make a living off this? In the United States, we might have a few million already. While that is not going to change the work-employment structure much, it is a beginning. If it is starting a trend, we could see this number grow into the tens of millions.
That is a number which could have serious impact upon the labor market. More attention is being paid to the concept of Play To Earn in the gaming realm. With more than 2 billion gamers around the world, that is an idea that could take shape very quickly.
What happens when there are tens of millions of people who no longer are dependent upon a physical location for their sustenance? How does this change the concept of living? Do people opt to reside elsewhere?
Anyone who is in that situation can operate any place in the world. As long as there is an Internet connection, one is good to go. Could we see people making tens of thousands of dollars a year off cryptocurrency? This is not enough to live on in major cities but it could be in more rural areas, especially in second world countries.
Much like globalization with manufacturing, this idea that is being laid out here would see the exporting of real estate appreciation. In other words, it would shift from urban areas to more rural. There is plenty of real estate available. The challenge is that, in most countries, people are packed in like sardines. They are all centered around a few major areas.
Of course, there are some countries like Japan that simply do not have a lot of land. Even there, though, we are seeing a lot of rural land opening up. Could the trend reverse as people get tied of trying to survive in a Tokyo, opting for something further out that carries a much lower price tag?
The real shift happens if people start migrating away from the more expensive countries to those that are more affordable. This will require some serious upgrades by many countries, something that could result if money starts flowing in.
As people get tied of the high expense of, say a United States, perhaps countries like Ecuador make a lot more sense. That country could see a boom as money flows in from the north. It already does well with retirees and ex-pats, now it could solicit those who are earning their living online.
Of course, one of the biggest factors is about to be solved in the next year or two. For people to work-from-anywhere, a reliable Internet signal is required. Many parts of the world would be hindered by this. However, with SpaceX shooting up satellites in batches of 60, they plan to blanket the planet with Internet coverage by 2023. Therefore, people will be able to literally work from anywhere in the world if they can do their job via the Internet.
Such a migration would pull the value away from the more developed countries into other areas. While there might be little reason to be in London or San Francisco, the same could be true of the U.S. or U.K.
This is a concept that might sound foreign to most people. However, give it a few years and we could see it taking hold. There is a chance that governments will start to see the advantage of trying to appeal to the global community in an effort to attract international people along with their money.
We could see a massive shift in the standard of living of these nations in a little over a decade. A small country would be well served by attracting tens of thousands of Americans with steady incomes. It would accelerate their economies by bringing in millions of dollars.
All of this could cause a massive shift in the global real estate market. We could be at the beginning stages of the globalization of real estate.
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