Housing, groceries, utilities, healthcare, and food are some of the basic necessities that make up the cost of living for the average citizen. The cost of living in developed countries is higher than in developing countries because the resources are more readily available and accessible. The spending and saving habits of many Americans is to apply the 50/30/20 budgeting rule: allocating 50% of your income towards necessities, 30% to luxuries, and 20% to savings. However, it has been observed that this spending pattern is changing lately, due to an increase in the cost of living in the United States.
Why has the cost of living increased in the United States?
The purchasing power of the dollar has reduced over time. Is the rent of your apartment in 2021 the same as it was in 2011? While it’s true that your salary has also increased (perhaps by more than double), nobody can deny that the out-of-the-pocket cost has multiplied significantly. The greatest contributor to this is the burgeoning cost of real estate, making it impossible for certain demographics to invest in their own house in the United States. As housing shifts to the outskirts of cities but with increased mortgage payments, it is becoming more and more difficult for young professionals to find homes they both love and can afford.
Real estate in the United States is a great investment opportunity for Millennials & Gen Z’s because their youth affords them a longer period of growth. However, they face financial struggles in the midst of rising costs of living. Many in their early twenties are still trying to find career stability while having the burden of paying off student loans and trying to survive on a higher standard of living. Millennials in the age group of 26-40 face even more pressure, as most people begin to start families in this age group.
Is there a breakthrough?
Real estate has traditionally been an opaque industry, with accredited institutions having the most access to the most exciting projects of the city. However, the latest technology promises an exciting breakthrough in democratizing access to opportunities and lowering the cost of entrance. Real estate tokenization is a form of investing; empowered by technology, it allows young investors to invest in real estate at much more financially feasible amounts. RealT real estate tokens are a fragmental share of real estate with the same potential for high returns, but with more liquidity than the traditional form of the asset. These tokens are standard forms of cryptocurrency, where the value of the underlying asset is transparent and public. The benefit of this fractional real estate tokenization is the transparency of transactions and elimination of middlemen which were traditionally stapled in the industry. It is now easier to raise capital and allow buyers to invest without the requirement of any financial middleman to underwrite the project. Asset investors can raise funding through tokens and buyers can invest at the base value of an asset, pocketing gains over the appreciations in future price. The high barriers of entry in real estate can be overcome through the function of fractional real estate. Young adults who are tech-savvy and highly familiar with the digital world can also track the real-time value of their investment property. Crypto appears to be the future of finance and buying assets real-estate through blockchain definitely seems to be the way forward!