United

when

Opinion by Denis Petrovcic, co-founder and CEO of Blocksquare.
Wealth is becoming one of the most significant indicators of the generational divide, with real estate investing overwhelmingly dominated by the most senior cohorts. Many young people face the harsh reality that inheritance may be the only path to home ownership — and only for those fortunate to inherit.&nbsp;
While there are no magical solutions to capital distribution, fractionalized real estate tokens offer an accessible route into real estate investing that could enable Gen Z buyers to participate in a share of the returns.&nbsp;&nbsp; Amid a cost-of-living squeeze and many regions experiencing housing shortages, intergenerational warfare over the distribution of wealth and assets has never been more heated. The numbers don’t lie.&nbsp;
In the United States, for example, people over 60 are <a data-ct-non-breakable="null" href="https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html#:~:text=Trillion%20in%20Wealth-,Baby%20Boomers%20Hold%20Half%20ohttps://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html" rel="noopener noreferrer nofollow" target="_blank" text="null" title="https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html#:~:text=Trillion%20in%20Wealth-,Baby%20Boomers%20Hold%20Half%20ohttps://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html">sitting on</a> over half of the entire real estate market, compared to just 12% owned by those born after 1980. Moreover, the nature of the generational divide means that the younger Gen Z has <a data-ct-non-breakable="null" href="https://northstarprorealty.com/blog-1/f/the-great-wealth-transfer-a-new-era-of-opportunity" rel="noopener noreferrer nofollow" target="null" text="null" title="null">longer</a> to wait before they inherit any of that wealth.&nbsp;
Combined with high interest rates that put mortgage costs out of reach, the idea of property ownership is often a distant dream for younger people. Boomers may point to the challenges they faced getting on the property ladder. Still, the <a data-ct-non-breakable="null" href="https://www.housingwire.com/articles/boomers-struggled-more-than-millennials-to-buy-their-first-homes/" rel="noopener noreferrer nofollow" target="null" text="null" title="null">validity</a> of those arguments doesn’t change the reality for a generation that faces a lifetime of paying someone else’s mortgage as a renter.&nbsp;
Not only can the landlord continue to ensure their costs are covered by simply raising rents at the tenant’s expense, but the landlord is also the sole beneficiary of any appreciation of the value of the land or the property. The status quo is self-reinforcing, ensuring that those who are financially excluded remain so.&nbsp;
<h2 id="a-foot-on-the-ladder">A foot on the ladder</h2>
<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/fractionalization-of-real-world-assets-is-this-the-holy-grail-of-blockchain-tech" rel="noopener noreferrer nofollow" target="null" text="null" title="null">Fractional ownership</a> cannot solve a housing crisis. It does, however, open up the opportunity to get a foot on the property ladder — which has always been the most critical step when it comes to real estate investing. If someone can’t afford to purchase a whole property, investing in partial ownership offers some benefits.&nbsp;
For example, a first-time buyer who cannot raise enough to meet the high bar of a down payment could invest the savings they do have into a jointly owned home to rent out, for which they could receive a share of the rent and benefit from any appreciation in the value of the property. Except, it’s not necessarily so straightforward.
Fractional ownership has always been feasible in theory, but often impractical, owing to the legal complexities in creating meaningful shares of an object as immovable as a piece of land or a building. Blockchain has long promised to facilitate fractional real estate ownership via tokenization and onchain intelligent contracts. People have been talking about such use cases since the launch of Ethereum.&nbsp;
The legal and operational issues associated with a straightforward onchain property sale transaction have, however, proven prohibitive to tech innovation.
Recent:<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/crypto-market-cap-soars-new-all-time-high" rel="noopener noreferrer nofollow" target="_self" text="null" title="https://cointelegraph.com/news/crypto-market-cap-soars-new-all-time-high"> Crypto market cap hits $3.1T high, may soon surpass France’s GDP</a>
Even so, over the years it’s taken for the concept to become reality, and the idea of tokenized real-world assets has become <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/rwa-tokenization-sector-50x-growth-2030-report" rel="noopener noreferrer nofollow" target="null" text="null" title="null">far more socially acceptable</a> to mainstream institutions. At the same time, the economic conditions of recent years mean that there has also been increasing interest in the concept of fractional ownership, which has led to the<a data-ct-non-breakable="null" href="https://qz.com/real-estate-housing-market-fractional-home-ownership-1851460546" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> rise</a> of several firms that facilitate the process offchain.&nbsp;
<h2 id="the-onchain-opportunity">The onchain opportunity</h2>
While this underscores demand, current fractional ownership models come with many concerns and potential risks for owners: Is the acquisition a proper share of real estate or a security contract backed by the physical asset? Who are the co-owners, and how many? How do you know your shareholder vote is counted? What are the conditions for selling your share, and might these change?&nbsp;&nbsp;
Onchain fractional real estate ownership can resolve many of these concerns by introducing transparency and accessibility and laying the groundwork for more liquid markets for fractional real estate based on tokens.&nbsp;
The rules of play and co-ownership status are available to all. At the same time, investors of all portfolio sizes can participate more quickly than today by trading real estate fractions as tokens. This opportunity spawns further opportunities. These include the diversification across a portfolio of properties that are all but closed off to younger individual investors.&nbsp;
The opportunity to create liquid, accessible markets for fractional real estate investing is only achievable onchain, where assets can be issued, traded openly and decentralized. Otherwise, the liquidity and accessibility benefits become lost in a landscape of centralized companies where partial ownership shares cannot be easily traded or sold.&nbsp;
Many Gen Zers may feel locked out of the real estate markets for good. Tokenizing real estate shares may, however, be the key that unlocks property investing for the next generation.&nbsp;
Denis Petrovcic is co-founder and CEO of Blocksquare, a blockchain-based real estate solutions company. With a background in finance and technology, Denis is also an active member of FIBREE (The Foundation for International Blockchain and Real Estate Expertise), where he contributes to advancing the adoption of blockchain in the global real estate industry.<advertisement>
 This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
 <template data-name="subscription_form" data-type="markets_outlook" label="Subscription Form: Markets Outlook"></template> 
</advertisement>

Tokens will help Gen Z break into locked housing market

Table of Contents

Cointelegraph

Other articles published on Nov 14, 2024

Indian Authorities Arrest Key Suspect in WazirX Crypto Hack

TRON Might Rally, ChainLink Rolls Out New Update & Altcoin Forecasted to Hit $20: Which Is the Be...

Looking to Make the Most of Bull Run? This New Meme Coin with 1000x Potential Can Make You a Mill...

Crypto market cap reaches new all-time high as assets rally market-wide

Wall Street’s EDX crypto exchange hits $36B trading volume in 2024

Almost 40% of This Year’s Top 50 ETFs Are Focused on Cryptocurrency

Join our free newsletter for daily crypto updates!