The real estate sector is changing continuously with many new trends coming and going every time. Even currently, many trends are dominating that may eventually prove interesting to the people who may be on the lookout for these investment opportunities. Here are some of these trends that are shaping the real estate market today.
Demand For Cryptocurrency Payments
The first trend that is taking over this industry is the increase in demand for digital currency payments. The trend has been developing gradually in the real estate sector for years now. Some isolated cases of people buying real estate with crypto have been emerging for a long time. Lately, they have been seen to increase quite considerably.
This trend was discovered by some of the biggest payment and development firms in the world, including Square, PayPal, and Visa. They discovered the emerging trend following the increased adoption of cryptos by users around the world. In the case of PayPal, the company reported gaining $16 million in net new active accounts in Q4 2021.
Moreover, PayPal saw $277 billion in total payment volume, an 11.8% revenue increase, and all of which was realized after it enabled cryptocurrency sales and purchases on November 12, 2021.
On the other hand, crypto adoption comes due to multiple reasons like greater media coverage, central banks’ development of CBDCs, surging prices, government adoption, institutional interest, and more.
Cryptocurrency owners now look at real estate as a great way of changing huge amounts of digital currency, mostly bitcoin (BTC), into material assets. Normally, it is not as simple as an investor buying a property using fiat. But, there is a prominent upward trend to conduct such types of transactions.
That trend is mainly popular with many more luxurious purchases. In 2019, for instance, a company known as Magnum Real Estate Group sold a condominium in New York City for $15.3 million in Bitcoin to an anonymous buyer from Taiwan.
Also, there was a report by Buzzfeed News from 2018, which mentioned that Realtor.com counted 37 single-family homes in the United States that were accepting Bitcoin payments. About half of them were in Florida. Interestingly, one listing agent operating in this state anticipated that at least 25% of their sales would be made in bitcoin in five-years-time.
Real Estate Sales Are Shifting To Online Entirely
Many participants in the real estate business have recently discovered a growing trend of acquiring real estate online. It is not quite difficult to understand since the global pandemic has been holding a strong grasp on the whole world in the last 12 months.
While many people are still trying to avoid traveling due to many health reasons and since many countries are still closed to some extent, business will not pause and wait for the health crisis to end.
That was particularly noticeable by the companies that work as intermediaries for different foreign clients from Asian countries, as reported by Forbes. Asian customers are continuing to acquire property throughout the world, and the COVID-19 pandemic is not stopping them. Nothing has stopped since a lot of businesses are being conducted online, including real estate purchases.
The world of digital assets is seen to expand constantly, and real estate is now highly compatible with this method of doing business. In general, if stocks, money, contracts, goods, and a lot more can be shifted into their digital form, then real estate should also survive.
Blockchain Technology Adoption Explodes
For years now, technology has been reshaping the real estate sector. However, blockchain appears to have had the greatest impact on the industry this far. The nascent technology comes with many benefits for the real estate space. It offers digital transactions, tokenization, record-keeping, authenticity, and a lot more.
All these features and functions can be used for the creation of efficient solutions for residential and commercial real estate purposes. A good example is ATLANT, a firm that developed a platform based on blockchain. The platform is used to facilitate real estate and rental property transactions. It was also theorized that blockchain technology adoption may save the US mortgage loan sector as much as 20% in expenses annually.
Moody’s Investor Service alleges that it could be up to $1.7 billion in yearly savings. For that reason, startups like ShelterZoom came up. This firm strives to streamline real estate transactions by putting processes on Ethereum’s blockchain. The firm had partnered with over 90 brokerages even before going live in 2019.
Blockchain enables firms to conduct their due diligence, enable crowd-sourced investment, and much more; all through an immutable and decentralized distributed ledger. It has already been discovered that blockchain can boost trust and transparency while simultaneously reducing siloed databases. It allows for more efficient and cheaper transaction processes while limiting the use of intermediaries that eventually leave the buyers with more money which they can use for other investments.
Blockchain can make the property search process faster and easier which makes property management quite simple. Also, the improvements to financial evaluation processes are the other benefits that the technology brings to the real estate world.
Global Liquidity And Tokenization
Tokenization takes up a major part of what blockchain appears to bring to real estate. It has grown to become a separate trend that is revolutionizing how business is done in the industry.
Notably, it is a process of representing a segmented and fractionalized ownership stake in any underlying asset. The asset can be anything, not just real estate. But, real estate is one area where the tokenization process may see a significantly large application.
This far, tokenization has had a major positive impact on the real estate industry. Although it is yet to reach full development, it is growing and someday it might enable people to invest small portions of their money into property. Later, they can trade their investment which might not be the case with shares.
The entire process would need nothing but a smartphone and a bit of money. That is almost unimaginable to the investors that have already gotten used to lots of paperwork and millions of dollars used for real estate investments. That is not a mirage in the future since it is already happening.
Red Swan, a Texas-based commercial real estate marketplace, tokenized billions worth of real estate assets. This process is not popular so far, but it exists, and it is proven to work. It enhances liquidity in real estate enabling investors to quickly convert their assets into cash whenever the need arises. That makes real estate investments more accessible to people that do not have millions dedicated to the industry.
Tokenization is automatic, transparent, cheap, fast, and introduces many investment benefits to the sector.
How Will The Financial Institutions Adapt?
Thus far, there is an incredibly positive influence that blockchain and cryptocurrency industries have already made on the real estate market. Proponents and analysts believe that the transformation has just begun. More is coming in the future.
The process is expected to explode in the coming years which will make tokenization a valuable common practice procedure. Some questions need answering; how will the traditional financial institutions behave about mixing crypto and blockchain with real estate.
Will it be possible to pay for mortgages using bitcoin? But, with technological advancements happening every day, financial institutions will likely learn to adapt to avoid being left behind and losing some portion of their revenue.
Some firms allow their clients to pay in crypto, but just because they have partnered with companies that instantly change cryptocurrency payments into fiat. In that context, it might take some time for the sector to rebuild entirely to guarantee that deals will use smart contracts.
Today there is still a lack of reliable intermediaries that may work between buyers and sellers and handle crypto transactions for them. Hence, development companies that move to take up this position and stand to benefit a lot quicker when they begin offering these services.
The demand for cryptocurrency payments is there, and so is the demand for real estate. As it was noted previously, there is a growing demand to acquire real estate investments with cryptocurrency. All that remains for the people is a means to do it.