The real estate market in the United States may benefit from Web3 solutions, but will the general public be interested in blockchain-based platforms?
The housing industry in the United States is on the verge of its next bubble as demand, speculation, and excessive spending continue to drive up the cost of homes throughout the country, eventually leading to a collapse. In addition, many homeowners are staying put due to rising mortgage rates, resulting in a shortage of houses.
According to data from Fannie Mae, the Federal National Mortgage Affiliation, 92% of homeowners believe their current residence is affordable. Research shows that 69 percent of the population—both homeowners and renters—thinks it’s becoming more challenging to obtain affordable housing.
The Real Estate Market and Web3
While the future of the American housing sector remains uncertain, the advent of Web3 business models centered on nonfungible tokens (NFTs), blockchain technology, and cryptocurrencies aims to resolve the majority of the difficulties now affecting America’s trillion-dollar real estate market.
Even though real estate is one of the best asset assets for wealth development in the world, most people cannot access it for three primary reasons, according to Jerry Chu, CEO of tokenization platform Lofty AI:
“Real estate is expensive, especially at present. Even if a borrower is eligible for a mortgage, the down payment is often too high. Mortgages must be approved, and a title escrow process may take up to 60 days, making the real estate process tedious. Finally, there isn’t a lot of liquidity in real estate, so if a seller wants to liquidate quickly, they’ll likely lose money.”
Chu set out to make a platform that would fractionalize real estate to make it more accessible to a broader range of people. Chu said that the Lofty AI platform is built on the Algorand blockchain and comprises various turnkey rental units that can be purchased for as low as $50 apiece. Further, he adds that “You may think of each property on the Algorand network as a mini-blockchain. Each property has its unique tokens, or “belongings.” According to Chu, the number of tokens given out depends on the value of the attributes.
While tokenizing real estate has become more common — for example, a recent Cointelegraph study found that real estate accounts for 89% of all traded security tokens – the Chu observed that Lofty is an active investment platform. In contrast to other investment platforms, we allow investors to manage and profit from the properties that they invest in. ”
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