Real estate is a type of real property that involves land and anything permanently attached to it, whether natural or man-made.
- In real estate, there are five major categories: residential , commercial, retail, raw property, and special use.
Real Estate in USA
- In USA ; Since 2018, house prices have risen 7.2 percent in the United States.
- There are nearly 44 million renter-occupied properties in the United States, relative to 75 million owner-occupied properties.
- Around two thirds of investors concentrated mainly on the stock market in 2007. That figure has dropped to 50%, with many Millennials opting instead to invest in real estate.
- Over the past year, 91 of the top 100 housing markets have experienced price raises.
Real Estate in India
- If we talk about India ; every month, 20 million Indians look for homes online.
- Almost 53% of India’s overall real estate transactions are affected by the internet .
- The real estate market is the country’s second-largest employer, behind the agricultural industry.
- The sector is projected to rise by 30% over the next decade.
- Housing actually contributes five to six per cent of the country’s gross domestic product .
Even 2% of Canada’s GDP is from real estate transactions . Real estate sector will continue to grow in future .
Drawbacks in Traditional system :
- Lack of information transparency . Everyone has their own system , buyer / seller don’t have access to all of it.
- Lots of things to go through while purchasing or investing in it i.e. Contracts , Lawyers , Escrow , Trust , Agents , Brokers , Insurance etc.
- High translation cost and unnecessary expenditure i.e. Land transfer fees , Agent fees , Bank fees , Closing Cost etc.
- Misalignment of interest among parties as scam can happen, someone can experience a high loss of his/her ‘s hard earned money.
How can Blockchain Technology solve above problems ?
In the simplest terms, a blockchain is a time-stamped data set, operated by a group of computers and is not controlled by a single person. Each data block (i.e. block) has its own cryptographic principles (i.e. chain) secured and linked together.
All above problems can be solved easily as Blockchain Technology will
- Cut out the Middleman .
- One place for all Data .
- Increasing in Information Transparency .
- Reduce unnecessary use of resources .
- Reduce expenses .
- 100% security.
- No chances of fraud.
Blockchain Technology will use Smart Contracts. Smart contracts are automated . They execute themselves with unique instructions written on their code that are executed after certain conditions have been created .
What will smart contracts do in real estate ?
- We will be able to save a lot of our hard earned money by avoiding unnecessary expenditure on lawyers and brokers .
- Speed of real estate transactions will increase as it will remove unnecessary amount of high bureaucracy .
- It will shield owners from fraud on land. You will link your land, paperwork and contracts’ digital ownership directly to the blockchain. It is difficult to modify or change the blockchain while within .
Real life applications
Case Study 1: Open Law
- It is a framework for creating , executing legal agreements on Ethereum Blockchain . Legal Templates and Legal Markup language are some features for people from non tech background .
- It uses ERC 721 token to represent property .
- Pilot test with Australian law firm Corrs Chambers Westgarth is performed .
Case Study 2: Propy
- It is a marketplace to buy and sell real estate with Cryptocurrencies .
- There is Decentralized title registry . It is currently working with local government in Burlington , Vermont on pilot project to use Blockchain based system .
- Ukrainian developer Mark Ginsburg sold the Kiev property to Michael Arrington, co-founder of the tech news site TechCrunch, for $60,000 via smart contracts on the Ethereum Blockchain .
What are the main challenges to all this Revolution?
- Many local rules , regulations and industry practices to overcome .
- Need for cooperation from government for land deeds and titles .
- Existing laws need to be changed .
- Complex scenarios needed to be handled smoothly .
- Jurisdictions where existing property records are poorly kept likely to be disputed .
What revolution will happen if implemented in future ?
- There will be a easier mortgage loan process but will need identity verification .
- It will support Fiat currencies or stable coin for purchase of properties .
- Tokenization of property by a digital ownership through token which will increase in Liquidity and also partial ownership.
- It will be the system which will help both landlords and tenants for rental properties . It will help the property management companies ultimately to adopt new and faster techniques .
- The blockchain technology would allow immovable property to be democratized. It would open the doors for possibly foreign buyers to test out real-estate investing. If implemented correctly, it can also be incredibly useful for crypto-space .
Hope you like it.
Hoping for a positive response.
How we will see Real Estate after 15 years? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.