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Is A.I. Reducing Housing Supply?

The volume of construction being dedicated to data centers and the infrastructure for A.I. is truly eye opening in an environment starved of housing, especially more affordable options. Is this massive effort taking away the resources, labor, utilities, etc needed to build and renovate more homes?

 

Our supply chain of materials to build are mostly based on year-to-year building volumes. So too is our labor supply. And utilities. And natural resources like water supply. Now throw in the massive surge in construction related to A.I. and technology, combined with the Trillion-dollar-plus infrastructure building related to the 2021 Infrastructure spending bill ($110 billion for roads and bridges alone) which is a lot of extra construction.

 

Worse, the tech sector is loaded with capital and provides a much larger incentive in the form of  profits for builders to build a data center, than it does to build $500,000 homes. It's faster to build, simpler, easier and very, very profitable. So let's add up the challenges:
 
 
1.  Insufficient materials supply chain
2.  New tariffs on many building materials and goods
3.  Reduced labor supply: deportations, sharply reduced immigration, lack of trade skills, education and training
4.  Mismanaged local governments that make approvals and inspections too slow and complicated
5.  Insufficient, inadequate infrastructure: electricity supply, water, sewer, roads, etc.
6.  More incentives to build a data center than a home
 
 
Add up the above and there can surely be only one outcome: Less affordability and a higher cost to build. Buyer beware! Yes, A.I. is costing us jobs, harvesting centuries of human knowledge, fueling extreme wealth disparity and concentration of power that is fueling rising political anger, and now it's possibly making housing less affordable too?

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Ken Dooley

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