America’s housing or real estate market is out of control, and Web3 could be the solution to this problem, but the question remains, will the mainstream real estate sector want to accept blockchain technology?
America’s Housing Problem
Home prices in America are increasing daily due to several reasons such as demand, speculation, and lavish spending. If this trend continues, America’s housing market will find itself at its wit end, and in due time, the entire industry may collapse.
The majority of homeowners are staying put due to an increase in the mortgage rate, creating a housing shortage. Statistics from the Federal National Mortgage Association, popularly known as Fannie Mae, show that 92% of American homeowners think their homes are “somewhat affordable.”
Be that as it may, further findings show that 69% of the general population, consisting of both, homeowners and renters, believe it is becoming too hard to find affordable accommodation.
It is clear that a solution to the housing problem in America is needed, and Web3 might be the unlikely source. The rise of web3 business models that revolve around non-fungible tokens (NFT), blockchain technology, and cryptocurrency may be the proper remedy to a situation currently plaguing America’s trillion-dollar real estate market.
Speaking on real estate, the CEO of Lofty Al, Jerry Chu, had this to say
“Real estate, especially today, is expensive. Even if someone could get a mortgage, a down payment often requires too much cash. The real estate process is also frustrating, as mortgages need to be approved, and a title escrow process could take up to 60 days. Finally, there is not much liquidity in real estate. Therefore sellers will likely lose money if they wish to quickly liquidate.”
How Web3 Can Solve Real Estate Problems
Lofty AI is a tokenization platform built by Jerry Chu. The platform is built on the Algorand blockchain and consists of several rental properties which investors can fractionally purchase for as little as $50.
“You can think of every property as its own mini blockchain on the Algorand network. Assets, or unique tokens, are created for every property listed. The token supply is different depending on how expensive the properties are,” said Mr Jerry.
Lofty uses a co-ownership model. The deeds for each property listed on the marketplace are held and owned by a limited liability company (LLC). When investors purchase tokens, they immediately become members of that entity which means they own a percentage of that investment.
Another, established player in tokenised real estate is Realt, which offers fractional ownership of properties around the USA.
Light At The End Of The Tunnel
The goal of platforms such as Lofty AI is to make real estate investing more accessible. Loansnap, a mortgage lender platform, recently launched a mortgage-backed stable on their Bacon Protocol at the end of last year. Web3 solutions will solve many of the current challenges homeowners and buyers face.
The only question that remains is how will the mainstream react to these innovations.