Tokenized Real Estate: The Future of the Market?

There are a number of issues in the real estate market at the moment that is making the housing industry more difficult for both buyers and sellers. It is even making it more complicated for investors! Many of the younger generations like the millennials and Gen Z are struggling to buy their first home. The prices are often inflated in a wide array of areas. Those who have survived the 2008 economic housing bubble that was caused by location-specific bubbles and poor lending practices are wary of entering the market. However, here are the top reasons why tokenized properties can improve the real estate market.

Top Issues that Cause Complexity in the Real Estate Market

There are a number of problems in the housing market including high costs in urban areas and complicated rental agreements. It has often limited accessibility and created more complexity for would-be home buyers. Creating asset tokenization, which is the process of turning blockchains into a liquid token can help reduce all of these problems. It sounds great in theory, but would it actually work?

The Basics of Asset Tokenization

For those who are not familiar with asset tokenization, it is the process of transforming a meaningful asset like an intangible (such as intellectual property) or physical asset (such as property) into a digital token. The tokens are treated like currency or stock shares. There are a number of different ways people create tokenization. There are just as many competing beliefs about how it can be accomplished in the most effective way. If it is applied to the real estate market, it allows homes to be sold in terms of shared equity instead of single units as they have been sold traditionally.

The Benefits of Real Estate Tokenization

Some of the benefits of tokenized real estate include accessibility, higher liquidity, and rental options. Tokenizing real estate makes them more accessible. For those who have never had the capital to invest in real estate, they would be able to invest in a small portion of a current property. For those who want to buy their first home, they would be able to purchase it with a smaller down payment as they gradually accumulate more shares of equity in the property.

Originally published at http://wdarrowfiedler.wordpress.com on October 4, 2020.