The dreams of owning a home have been halted by high costs, and those who are renting are experiencing similar economic strains. There are tight loan requirements, low employment, and one of the largest generations not being able to buy a house.
According to real estate mogul Grant Cardone, the necessity for substantially longer mortgage terms is imminent. “You can expect to see mortgages go from 30 to 40, 50, and even 60 years in your lifetime. You could, if you live long enough, see a 100-year mortgage in America.”
Low inventory exacerbates the problem, leading to rising home prices.
A new report from Redfin says that housing affordability fell this year to the lowest level on record. Mortgage rates went up so much that millions of Americans could not afford them.
According to the Redfin report, the typical monthly mortgage payment is $250 more than it was a year ago.
This real estate crisis could catalyze the growth of real estate tokenization.
There are ways to invest in real estate that don’t need to take on debt, even with the present economic difficulties. As traditional avenues become more difficult for many to navigate, the concept of tokenized real estate emerges as a potential solution, bringing several benefits for investors.
Tokenization refers to the process of converting real-world assets, such as real estate, into digital tokens on a blockchain. It’s the technology that makes fractionalization possible by leveraging blockchain and smart contracts to automate the process.
And why is it a solution? Here are 7 reasons:
- It eliminates the need for decades-long debt obligations.
- You can start investing with as little as $50.
- Digital platforms allow for easier and quicker transactions than traditional real estate, where the process can be lengthy and complex.
- Minimized risk: It is easier to diversify investments across multiple real estate assets by fragmenting properties into tokens, mitigating risks related to fluctuations in a single property’s value.
- By owning fractionalized properties, you can spread your investments across different locations and property types.
- Liquidity: fractionalized ownership of real estate properties offers instant liquidity, with an average expected yield of 10% for token holders.
- Real estate tokenization makes it possible to reduce bureaucratic costs and taxes. It also allows for faster fund transfers.
We can agree that the integration of blockchain and smart contracts in real estate simplifies the investment process. And in contrast to traditional real estate transactions, which can take weeks or even months, you can easily sell or buy your token at any given time.
Maybe this crisis is the start of a new era in homeownership, and future generations will finally be able to go debt-free. As the Boston Consulting Group said, asset tokenization will reach 16 trillion dollars by 2030. It’s a matter of time before this transformative reality becomes a cornerstone in reshaping the real estate industry.
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