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Lay It Again, SAM: Could Robots Build Your Next House?

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | July 8th, 2016

SAM is a bricklayer who never takes a day off, doesn't call in sick, never checks his cellphone and doesn't even take a coffee break.

Some would say that's inhuman, and they'd be right. SAM -- Semi-Automated Mason, that is -- is a robot. Once he's programmed by his handlers, he takes off, laying brick after brick after brick without saying a word. He can lay 1,000 bricks an hour and finish the typical two-story house in two days.

Created by engineers in Perth, Australia, SAM auto-corrects 1,000 times per second to prevent interference from sway and vibrations. Slapping mortar on the bricks and then putting them in place -- the exact opposite of the way humans do brickwork -- the machine is 20 times faster than a journeyman mason.

People still do the grunt work, like mixing the mortar and loading the bricks into the robot. It takes about an hour to set up the tracks, according to SAM's inventors, and then he -- oops, it -- is off. Enter the critical measurements for wall heights, window sizes and locations, and the machine lays brick all day long.

Some people don't think the robotic bricklayer will ever catch on in the real world of residential construction.

"Builders have been engaged for a thousand years trying to create a system better than masonry," posted one naysayer on ProTradeCraft.com, suggesting that it will take "our mechanical friend's inventors" just as long to get it right.

"I have to say, this will never work to be cost-effective," posted another doubter.

They may be right. But there's no doubt that robotics will one day be commonplace, if not to help erect the house, than inside the house to help simplify its inhabitants' lives.

Take robotic vacuums, for example. They made their debut in 2009 and have become hugely popular. The latest models can self-start on a programmed schedule, vacuum, sweep and mop an entire floor in a single cycle and return to their charging stations when their batteries run low.

Meanwhile, Asus, a maker of laptops and phones, has unveiled a plan to break into the "aging in place" market with Zenbo. At $599, Zenbo is marketed as a "fairly affordable" home robot that helps manage its owner's health and smart devices, according to trade pub TechHomeBuilder. Zenbo will remind people of doctor's appointments, medication and exercise schedules, while ultimately keeping a virtual eye out for emergencies.

Construction, on the other hand, has yet to be transformed by automation. But with builders finding it ever more difficult to find skilled labor in almost every trade, it's inevitable that "steel-collar workers," as robots are sometimes called, will replace some blue-collar workers on job sites.

"Anywhere you have unsafe, boring or drudgery work, or heavy lifting or something else physically demanding, you can have a machine do it," said Scott Peters of Construction Robotics in an article on HowStuffWorks.com. "What you have to do is find ways to define the problem and then add sensors and smart technology to do the task."

How about big, strong robotic helicopters, hoisting roof joists or wall sections into place? Daniel McQuade, chief executive officer of Tishman Construction, is thinking about them for commercial construction, so why not for houses, too? "In the next 10 years, there will be drones, with a guy running them from a safe place," he said at an Urban Land Institute meeting last fall.

And there are already driverless cars, so why not driverless construction vehicles? The Japanese firm Komatsu, which makes wheel loaders, excavators, dozers, crushers and dump trucks, is reportedly building robotic bulldozers guided by cameras, lasers and 3-D data transmitted by aerial drones hovering above them.

Then there's the giant 3-D robot printer created by a University of Southern California (USC) professor that can build a complete house in a single day. The robot can read an architect's computer-aided design drawings and spit out exactly what the plans call for. Building the house from the ground up, the machine, which looks like scaffolding with nozzles, loads up on semi-liquid concrete and extrudes it, layer by layer, into wall structures and domed roofs.

Sure, the robot could pop out cookie-cutter houses, one after another, as well a one-of-a-kind custom homes. But USC's Behrokh Khoshnevis, a professor of industrial and systems engineering, says his "Contour Crafting" robot can also build fast post-disaster housing for the displaced, military housing for our folks in uniform, inner-city and in-fill houses for people in need, and houses in developing countries.

Because the robot is quicker than humans -- and, once programmed, needs no rest -- Khoshnevis claims a 45 percent to 55 percent savings in labor. There's also an estimated 25 percent to 30 percent savings in materials -- with no waste.

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Quick Takes: Low Rates, 'Free Jet With Condo' and More

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | July 1st, 2016

Everyone -- well, practically everyone -- applauds lower mortgage rates. And why not? Lower rates mean homebuyers have more buying power.

In May, the average 30-year loan rate was 3.6 percent -- the lowest it has been in 36 months. But there is a downside.

When rates slip, points out Jonathan Smoke, chief economist at Realtor.com, the availability of credit declines. Lenders pull in their horns because it becomes more difficult to make a profit. "With little margin, lenders become more risk-averse," says Smoke.

While Smoke believes mortgage rates are likely to remain under 4 percent through the summer and into the early fall, they could spring up to more than 4 percent by the holidays. His advice: Stay on top of rates, work closely with your lender, and become familiar with options like interest rate locks and float-downs (a type of rate reduction).

"Given how volatile rates have been this year," he says, "borrowers are likely to see both lower and higher rates from time of application to time of closing, which is what makes these options potentially attractive. However, they do come at a price, so you need to weigh the potential gains against the costs with your lender."

There is garden-variety customer service, as practiced by many real estate professionals. There is great customer service, practiced by some. And there there's Jeff Miller.

Miller, a loan officer with PrimeLending in Tucson, Arizona, outshone them all in April, when he officiated the wedding of clients Donovan Riley and Rebecca Noreen.

When working to secure the engaged couple's mortgage in January, Miller half-jokingly told the pair that he was ordained, and that if they needed an officiant for their wedding, he would be happy to step in. He said he never expected to actually receive a call, but in March, he did: Riley and Noreen were experiencing difficulty lining up an officiant. So they reached out to Miller to see just how serious he was.

The pair was married, by their mortgage officer, on April 9.

A mortgage is definitely a long-term commitment, but this one came with an "until death do us part" rider. Now that's customer service.

President Herbert Hoover promised "a chicken in every pot." Now, South Florida real estate developer Tim Lobanov is promising a jet with every condo.

To boost sales at the Aurora development in Sunny Isles Beach, Florida, Lobanov -- managing director of the Verzasca Group -- is offering complimentary one-year memberships with JetSmarter, a service that allows members to charter private jets.

Surprisingly, prices at the 61-unit "boutique" condominium on the famed Collins Avenue seem fairly reasonable, at least for South Florida: $840,000 for a two-bedroom apartment, $920,000 for two bedrooms and a den and $1.4 million for a three-bedroom unit.

There's no doubt that the internet has allowed would-be homebuyers to do much of their searching online. There are about 123 million unique visitors per month to the top three real estate web portals, most of whom are seeing what's available and reading the latest "how-to" articles.

Now, QValue, a Denver technology company, has developed a formula that allows the computer to actually find specific houses based on what buyers say they want. In a test in April, a buyer told the computer and an agent what he liked, and the machine and the real estate professional went about the task of finding just the right house.

The experiment went on for three consecutive days, with the buyer entering different requirements each day. And each day, the computer turned in the buyer's favorite.

The difference: The QValue algorithm runs on "emotionally triggering" qualitative criteria, as opposed to quantitative measures such as price and number of bedrooms.

Chinese investment in the U.S. real estate market has surpassed $300 billion and is still growing, despite China's economic weakness and increased currency controls, according to new research.

Between 2010 and 2015, Chinese buyers bought $93 billion worth of residential real estate, nearly $208 billion of mortgage-backed securities and roughly $17 billion of commercial real estate, including office towers and hotels. The data comes from a report by the Rosen Consulting Group and the Asia Society.

Despite those eye-popping numbers, direct investment from China still makes up only 10 percent of all foreign investment into U.S. real estate.

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How Much Do They Earn?

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | June 24th, 2016

Ever wonder how much the folks who build, sell and finance houses earn? How much of what you paid went right to their bottom line?

If so, you've come to the right place. Now it can be told who makes what in the typical real estate transaction. Let's take a look, starting with the companies that build houses.

BUILDERS: According to the National Association of Home Builders' (NAHB) latest "cost of doing business" study, builders averaged just a tad over $3 million in gross profit in 2014 on $16.23 million in revenue. That's an 18.9 percent gain.

But after accounting for operating costs that averaged $2.02 million, their take was just 6.4 percent, or $1.04 million.

The remarkably detailed report goes further, though, breaking down the data by type of builder: those who build solely on their own lots, those who build on lots owned by their clients and those who do both. It also details earnings by region and by volume, and by builders who put up fewer than 25 houses a year and those who build more.

Since there is not enough space here to go into each category, let's just concentrate on the two largest segments: builders with land costs, also called speculative builders, who make up 38 percent of the total respondents to the NAHB survey; and combination builders, who build on their customers' lots as well as their own land, and make up 37 percent of respondents.

According to the survey, speculative builders' net profit averaged 5.9 percent. So if you paid $356,200 for your new house -- the average price for new homes in March, according to the latest figures from the Census Bureau -- figure that your builder pocketed $21,016 on your deal, give or take.

Combination builders netted more -- 7.6 percent per house, on average -- which works out to $27,071 in pure profit on the typical house. Not bad, except that it sometimes takes years to obtain the necessary government approvals to build, and then 90 days or so more to actually construct the place.

Breaking the profit picture down another way, small-volume builders, who comprised 65 percent of survey respondents, earned 5 percent on average, while their larger colleagues, aka production builders, made 6.8 percent.

REALTY AGENTS: The men and women who sell houses earn anywhere from under $10,000 annually to more than $250,000, depending on experience, hours worked and education. A deeper dive finds that the median yearly pay for a sales agent in 2014, according to that year's National Association of Realtors' annual member profile, was $23,300.

It is well understood that agents work on commission, typically 6 percent. But what is not so well understood is that they don't get all of that. Rather, they split their fee with their brokers, under whose licenses they work.

Nearly 80 percent of all agents work under a split-commission arrangement, generally 50-50. But the more productive they are, the better the split. And 13 percent keep the entire commission and pay their brokers a so-called "desk charge."

Income varies widely in the industry: After taxes and expenses, appraisers take home about $46,200, and brokers take in $96,200 if they don't act as agents themselves ($45,500 if they do). Experienced agents with 16 or more years on the job net a median of $42,000, but 3 percent walk away with more than a quarter-million dollars.

LENDERS: In 2015, independent mortgage lenders -- those unaffiliated with larger banks or with the mortgage subsidiaries of chartered banks -- earned an average of $1,189 in profit on each loan they originated, according to the Mortgage Bankers Association's (MBA) annual performance report. But in the first quarter of this year, their net gain on each loan slipped to $825.

A closer look shows that net production profits in 2015 were 55 basis points, or 0.55 percent of the loan amount. So multiply that times the amount you borrowed, and you'll have a good idea of what your lender made off of your deal, before expenses.

Because of larger loan balances last year -- $239,265 vs. $223,108 in 2014, a jump of 7 percent, and up 22 percent since the housing market collapsed in 2008 -- lenders' bottom lines rose nearly $450 per loan in 2015.

To show you how volatile the mortgage market has become, at least for lenders, the average pre-tax profit per loan in the first quarter dropped to 33 basis points, or 0.33 percent of the loan amount. Since the MBA began keeping records, net production income has averaged 52 basis points.

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