Roofstock, the online platform for investing in single family rental homes, announced last week they completed the sale of one their homes via a non-fungible token through their subsidiary Roofstock onChain. The Columbia, South Carolina home sold for $175,000 to local real estate investor Adam Slipakoff.
As one of the first NFT-based residential home sales for the US, the purchase took multiple players in the blockchain landscape to reach completion.
To start, the home is titled under a limited liability company whose ownership is linked to Home onChain, an NFT on Ethereum blockchain. The transaction took place on the Origin Protocol marketplace using the stablecoin USDC from Circle, which was converted from US dollars using Wyre. Financing was facilitated via Teller Protocol, a fintech platform that maintains the decentralized finance lending pool USDC Homes (which is not connected to the similarly named USDC, mentioned above). The buyer used a ‘multi-sig’ wallet on Origin, requiring two parties to sign off on the transaction before funds were released.
“The marketplace smart contract that we use instantaneously did that swap,” said Matthew Liu, cofounder of Origin Protocol. “The NFT shows up into this new multi-sig wallet and the USDC that the buyer paid was split [to different parties]. That all simultaneously happened in one on chain transaction.”
The transfer of funds were simultaneously sent to the seller, minus Origin’s standard fee of .5%, and Roofstock onChain’s fee of 2.5%. Prior to the transaction, USDC Homes required an underwriter fee and transacting on most blockchain platforms, including Ethereum, comes with what’s known as a ‘gas fee’ to pay for the cost of using the platform.
“The dream from our side is at some point in the future this technology can power a user experience that looks pretty equivalent to what like Roofstock’s existing business looks like,” said Liu, referring to how Roofstock’s investment process takes place fully online. “A lot of the difficult parts of the blockchain—fiat on ramps to crypto, the actual smart contracts, the selling of these entities, etcetera—get simplified so that traditional home buyers and sellers don’t need to fully understand this technology. This is laying the early groundwork for all of us as a collaborative industry to eventually disrupt traditional real estate. It may take five years, 10 years. But that’s what we’re most excited about.”
Before the transaction could take place the buyer had to have their identity verified in a traditional ‘offline’ manner so they could have a whitelisted wallet on Origin.
Liu envisions a future where these NFTs can be sold to additional parties saying, “Because NFT’s are interoperable and they can be easily transacted, in theory they can also be fractionalized. So you could turn one home into many small homes. That creates better market efficiency, price discovery, liquidity and also access to more people.”
There are other players in the blockchain space when it comes to buying and selling physical properties. Real estate startup Propy has completed several sales, most recently in Gulfport, Florida and has more coming. Another $4 million home under construction in Utah is planned for an NFT sale later this year.
Investments in Inuit housing inadequate to address human rights violations: watchdog
From a family living for seven years in a condemned home that was meant to be temporary to people with disabilities having to be carried in and out of their bathrooms, Canada’s housing advocate says during a tour this fall of several Inuit communities she got a glimpse into the dire living conditions many have faced for years.
“The current levels of federal investments are not adequate to remedy the human rights violations caused by the housing shortage,” said Marie-Josee Houle.
The independent, non-partisan watchdog helps promote and protect the right to housing. Houle, who was appointed to the role earlier this year, travelled in October to Nunavut and Nunatsiavut, an Inuit region in Newfoundland and Labrador.
“The purpose is to really learn more about systemic issues in the North that need really serious attention and to listen to people with lived experience of their housing precarity and homelessness,” she said of her trip.
“That focus on the North is also because people don’t go there or they don’t have the opportunity to go there.”
Among the biggest takeaways, Houle said, was that housing is in short supply. Housing that is available is not in a good state, with issues like mould, or is otherwise unsuitable for elders or people with disabilities or children.
“The government neglect and underfunding for Inuit housing has absolutely taken its toll over the years,” she said.
“Residents report a lack of trust in public institutions responsible for housing because the wait-lists are decades long and they’ve given up even applying for the housing programs.”
Houle said inadequate housing in the North has led to overcrowding, increased contact with the justice system, exacerbated mental health issues and tension among families. It also means many people are forced to leave their communities, which can result in isolation, racism and violence.
“If it’s not by choice, it can be a traumatizing experience for people,” she said. “There’s a lot of harrowing stories.”
The 2021 census found almost a third of the nearly 49,000 Inuit who live in Inuit Nunangat — or Inuit homeland in Canada comprising communities in Nunavut, Northwest Territories, Newfoundland and Labrador and northern Quebec — were living in dwellings in major need of repairs. More than half were living in crowded homes.
This is not the first time abysmal housing conditions have been documented in the North.
The Standing Senate Committee on Aboriginal Peoples released a report in 2017 detailing the severity of the housing crisis in Inuit Nunangat. Former Nunavut NDP member of Parliament Mumilaaq Qaqqaq documented “inhumane” housing conditions in several communities in March 2021.
The federal government said it has made several investments in housing across Inuit Nunangat over the years. That includes $256.7 million over two years in the 2016 budget, $400 million over 10 years in the 2018 budget and $845 million over seven years in the 2022 budget.
But Houle said there’s a need for more federal, provincial and territorial support, such as long-term funding and maintenance. She said it should respect Inuit self-determination and address unique northern challenges, such as the climate, short construction season, lack of transportation infrastructure and high costs.
In its 2022 pre-budget submission, Inuit Tapiriit Kanatami said it would take more than $3 billion over the next decade to construct new housing, as well as maintain and repair existing homes in Inuit Nunangat.
Nunavut Premier P.J. Akeeagok and representatives from Nunavut Tunngavik Incorporated met with Prime Minister Justin Trudeau in October to request $500 million in the upcoming budget to address the territory’s housing gap.
The Nunavut government recently announced a new plan to build 3,000 more homes by 2030, tripling the annual rate of new public housing units currently being constructed. Of those, 300 will be transitional housing units, 1,400 public housing units, 900 affordable housing units and 400 market housing units.
“It is ambitious, but I think if we stick close to the plan and things work out, it’s very achievable,” said Lorne Kusugak, the minister responsible for the Nunavut Housing Corporation.
Kusugak said the territory can’t continue to build homes the way it has in the past, where bids have come in at about $1,000 a square foot. He said instead of issuing annual requests for housing, the territory is partnering with the private sector to build homes over a longer period of time at a lower cost.
“We know this isn’t going to be easy and there will be a lot of criticism throughout the process, but we have to do something,” he said. “If we accomplish a few more houses each year by doing this … then we’re headed in the right direction.
“It’s going to be a struggle, it’s going to be a fight. We’re ready for that fight.”
This report by The Canadian Press was first published Dec. 3, 2022.
This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.
How To Invest In Real Estate On A Budget
The Machine That Builds a Future
The first accounting of all the land in England was first published in 1086, the ominously named Doomsday Book, it documented the holding of the King and how it was distributed among the aristocracy. Almost one thousand years later the wealth of these families is still visible.
In more recent times, the average house price in the US in 1963 was $19,300 ($187,982 adjusted) and by Q3 of 2022 this has climbed to $542,900, now increasing Year on Year by 17%. This makes it one of the best secure returns available, with any downturns correcting quickly.
This brings us to the question: Why have more people not taken advantage of this wealth building tool?
The oldest market in the world is slow, inefficient, and run by institutions.
Through the history of real estate ownership there has been institutional motives to control access to it. The process known as “Red-lining”, where financial support for home ownership was restricted in certain neighbourhoods, is responsible for a significant portion of the wealth inequality in the United States today.
Outside of these issues, the barriers to entry into real estate have been historically high, and are becoming higher as demand outstrips supply. The upfront capital, creditworthiness, and risk continues to place real-estate investment, particularly as part of a portfolio, outside the reach of many people.
In practical terms, the linking of investments to an immovable object presents challenges of liquidity and exacerbates risk. The average real-estate transaction takes 30 days to complete and involves multiple layers of fees and professional services that can degrade the value of the transaction.
While this transpires, the physical property is subject to environmental risk like damage and degradation, and shifts in the local economy and property market, something which caused huge economic damage to individuals in industrialising areas of the United States.
Alternatives for investors have traditionally included Real Estate Investment Trusts (REITs) that spread their investments across multiple properties and markets to take advantage of the overall upward trend and mitigate local fluctuations. Many can be traded as stocks and have a level of liquidity to them above the liquidity of the real-estate asset itself.
These can work well for some forms of investors who are willing to sacrifice control of their capital and lose some of its liquidity in exchange for security and convenience. These can also come with upfront investments that customers might not have available or feel comfortable locking into a commitment.
Fractional Real Estate Investment
As we have seen with investment retail-trading in recent years, progress in technology has begun to disrupt and change this market. EstateX is an organisation developing investment and payment tools that will use blockchain technology to produce their own real-estate backed digital assets.
Blockchain is a system of distributing a collective ledger that tracks ownership through a decentralised system of transactions. This can be used to track the movement of things like ownership rights of artworks, digital currency, and the digital trading of securities. These can be bought and sold through exchanges that operate 24/7.
Fractional investment allows investors to own portions of multiple properties through a single digital asset that can be stored, traded, and liquidated in speeds closer to minutes than the weeks that would be required for traditional investment assets. The liquidation channels and choice of portfolio options being left to the investor, rather than a fund manager, allows for migration of the significant risk associated with single property investing.
EstateX has developed their EstateX Pay platform that will give investors a physical Mastercard
payment card that can be used to make everyday purchases using their property portfolio and dividends payment, making their investment instantly liquid. Investors will also be able to leverage their portfolio into instant, permissionless loans of up to 70% of its value, or as an overdraft through their EstateX Pay card.
of Equity and Equality
Major investment institutions, similar to most forms of banking, have usually catered to retail investors as a secondary market due to their relatively small capital offerings. As a result, the utilities available have been geared towards the convenience of these larger customers. In contrast, fledgling retail investors that are more interested in high liquidity assets and direct access to their returns have been underserved.
Platforms like EstateX aim to support smaller investors by allowing entry for as low as $100 and paying dividends on a daily basis from the first day of investment. Regular and easily accessible dividends also allow for investors working towards building a passive income lifestyle.
Through the high returns possible in the real estate sector allowing for a hedge against and above inflation, new platforms like EstateX could have the potential to create opportunities for previously marginalised communities by giving them access to wealth building tools they have been historically restricted from.
Divorcing couples face hard decisions as real estate market tanks
By the time most divorcing couples find themselves in a lawyer’s office, glaring at each other from across a table, counselling has failed, goodwill has evaporated and the best way forward is a speedy division of assets so both parties can move on with their lives.
But with a volatile real estate market that has taken housing appraisals on a wild chicken run, the road to a new life has become rife with potholes.
“It’s just made everything so much harder,” says Diane McInnis, a collaborative family lawyer and mediator who focuses on “consensual dispute resolution.”
“All of my clients are in a panic — ‘I’m not gonna have enough money to be able to pay bills, to keep the house, to afford to rent!’ They’re desperate to get as much money as they can from the other person. And the other person is saying, ‘I need to house the kids and look after them too!’
“Two people and two homes on the same income level is much more expensive than one home.”
After months of escalation, housing prices have dropped in the wake of recent interest rate hikes to combat inflation, and that has sent anxieties through the roof.
With good reason. In October, Canadian mortgage interest costs increased year-over-year by 11.4 per cent, the biggest increase since February 1991, when there was an 11.7 per cent jump, according to Statistics Canada.
As interest rates continue their soufflé-like expansion, economists expect another 10 to 15 per cent drop in housing prices by spring 2023.
“I’m almost to the point where I’m saying, ‘OK, we’re going to start negotiations and deal with as much as we can, and get the house valued at the end, so we can see what we’re actually dealing with here, ’ ” says McInnis.
“Let’s say it takes three to six months to negotiate. If people get their house valued as an asset at the beginning, by the end they’re saying, ‘Wait a minute, that’s no longer what the value is!’ And now they’re renegotiating, and that’s causing headaches trying to get refinancing and all those things.”
She sighs. “It’s so stressful for clients. The housing market has been the bane of my existence as a lawyer assisting clients through separation and divorce.”
It’s no secret to Mary Goncalves, whose divorce proceedings have dragged on for almost three years, and for whom delays in reaching a settlement have meant massive financial penalties.
“Basically, you’re going through a terrible divorce, acrimonious, and it takes so long to get to the point where you need to settle,” says the retired mother of three adult children, whose multimillion-dollar home went on the market in August after 15 months of legal wrangling.
“It really holds you back with starting a new life and moving forward.”
Part of the issue was tensions with her ex, a familiar scenario exacerbated by the pandemic.
“I’m finding in the last few years that couples separating are higher-conflict than they’ve ever been,” says McInnis.
“People are so stressed out, so self-absorbed, so involved with social media, with so much feeding into their brains.
“I think what the pandemic did was expose the cracks in relationships sooner.”
Goncalves — whose housing appraisal dropped from between $10 and $12 million to $9 million while an agreement was being hammered out — knew the market was peaking, but says her ex kept finding reasons to delay.
“We finally got approval a year after the market peaked,” says the local woman, now living in a separate residence.
“But now we’re in a situation where there’s uncertainty with fluctuating interest rates.”
To minimize losses, some couples are considering more creative options.
“People say, ‘Well Diane, we could sell the house, but for both of us to go out and rent would cost us more than our monthly mortgage,’ ” says McInnis. “ ‘We don’t have enough money to buy. I’d rather try to keep the house and figure out a way where I can buy the other person out.’ ”
But in a market as variable as the weather, pinpointing a fair price again becomes an issue.
“Last year one client had their house appraised, then three or four months later it was reappraised and went up by $60,000,” says McInnis. “So there was still conflict over the negotiation. When they were into it six months, the house had gone up again.
“One person accused the other, saying, ‘You’re just delaying because house prices keep going up!’ But the other person was saying, ‘Well no, because the longer this negotiation goes on, the harder it is for me to buy into the market because housing prices are going up, so I can’t afford to accept a lower value.’ ”
She sighs. “With one couple, in the course of a six- or seven-month negotiation, the housing price changed three times upward. It was a nightmare.”
When prices dropped, which happened when interest rates began their upward ascent in March, the stakes became even higher.
“It just creates more stress for people because they’re not willing to make the jump, because they don’t know what the other side looks like,” says family lawyer Heather Caron, whose Kitchener law practice is “crazy busy” with a 25-per-cent jump in divorce cases.
“I can’t give them any idea financially of where they’re gonna be. If your house comes down in price $200,000, that’s $100,000 each that you’re losing.”
One local woman — who asked that her name be withheld while her divorce winds through the legal system — saw her matrimonial home drop 12 per cent in value while she and her ex wrangled over details and acknowledges that “when it comes to two warring parties, you can’t control the situation.
“There’s no point crying over something already done,” she says. “But the time lag has cost us dearly.”
For those whose finances were precarious to begin with, the impact can be even more devastating.
“A lot of people are in the gig economy, working part-time,” notes McInnis.
“When dividing things up they just don’t have the cash flow for banks to approve them. It just feels like owning a home now is really an exception. It’s not attainable for the average person.”
At the end of the day, says Caron, the best option for divorcing homeowners is to wait until the market settles.
“Everything is in flux right now. I’m telling people if they can hang on, hang on. Let’s deal with this, maybe in the spring, when there’s some certainty and more stability.”
Realistically, she knows, this is an unrealistic option for many.
“For them to stay in the same house, sharing the parenting, is a huge stressor,” she admits, “because they can’t get any kind of finality on this. They can’t move on.”
Does anyone look at the “crazy house fluctuations,” reel from the sticker shock and head back to counselling to work things out?
“I’m not seeing that,” says McInnis.
“Most of my clients have said, ‘Yes, we’ve gone to couples counselling,’ but by the time they see a lawyer, they’ve pretty much decided it’s not workable.
“I can honestly say in the last five years I’ve never had someone come in and, when they look at finances and numbers, say, ‘We’ve got to work on this to make it work and stay together!’
“Occasionally people do reconcile, but it’s very unusual.”
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