Epic Real Estate Investing - What Is Metaverse Real Estate | 1216

Episode Date: July 5, 2022

This digitalized epoch has introduced the metaverse, allowing people to do their tasks or work virtually. As technology advances, the real estate realm is also improving. How? Stay tuned, and learn about what is metaverse real estate. BUT BEFORE THAT, Matt goes around the possible crash of the real estate market in 2022.     Are you ready?   Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Will the real estate market crash in 2022? I mean, that's a really good question. A lot of people are asking it because, you know, the talk of a likely housing bubble has indeed intensified amid the surging prices. You know, and as buyers grapple with rising rates, the demand for housing has begun to wane and the overall market is starting to cool, but will the market crash?

Well, let's take a look. You ready? Let's go. Welcome to the all new. Epic Real Estate Investing Show. The longest running real estate investing podcast on the interwebs. Your source for housing market updates.

Creative investing strategies and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel. EpicR-E-I.TV.

If you want to make money in real estate, sit tight and stay tuned. If you want to go far. Share this with a friend. If you want to go fast, go to r-e-i-aise.com. Here's Matt. All right, so by the time we're done here, you'll completely understand the likelihood of a real estate market crash in 2022 and what you should do, if anything, about it. Because speculation about a possible housing bubble took full bloom this spring. Traditionally, the biggest home buying season of the year. And when people start talking about bubbles,

it inevitably leads to the question of whether the bubble will pop with a crash or more gently ease its way back down to earth in a modest correction. So the big picture, one really need look no further than the law of supply and demand. As the Federal Reserve's decision to raise interest rates from their near zero levels, they're propelling mortgage rates to levels not seen in nearly 13 years, of which is having a direct impact on the demand to buy real estate. You know, new mortgage applications are down to roughly half what they were a year ago. And here's why.

See, the data from Freddie Mac shows the average rate on a 30-year fixed mortgage is now up more than 2%. Two points from the end of 2021. And that's a big deal considering that every 1% increase in your mortgage rate, it diminishes your buying power by 11%. So with rates having increased 2%, that translates to a 22% decrease in your buying power. I mean, it has the same impact on a buyer as if home prices had increased 22%. So no wonder so many are tapping the brakes. No wonder the market is beginning to fizzle. Now, housing affordability right now, it's sitting at a decade low.

And that could mean a larger shift is looming. So as the demand wanes and with future hikes in rates to battle inflation are almost guaranteed, either one of two things can come next, a correction or a crash. So a correction would entail a gradual drop in prices to more sustainable levels, whereas a crash would result from either a rapid drop in prices triggered by widespread panic from homeowners and investors, or a wave of foreclosures. So that's what's possible, but what's probable?

Well, with property owners now leveraging more than $9.9 trillion in home equity and mortgage lenders having enforced and continued to enforce stricter standards for the last 15 years or so, it's unlikely the real estate market is heading towards a crash, especially with anything that would resemble what we saw in 2008. And I bring that up because the COVID-19 housing market is drawing many comparisons to the real estate market of the mid-2000s. But the two periods couldn't be more different. I mean, it's no secret the housing market played a central role in the Great Recession. But this market, it's just fundamentally different in so many ways. The housing bubble that led up to the 2008 crisis can be attributed to a combination of, one, cheap debt, two, predatory lending practices, and three, complex financial engineering that resulted in many borrowers being placed into mortgages that they could not afford.

Further, builders were building new homes so fast that eventually they outbuilt the demand. There were more homes available than were needed to support the population at the time. In 2022, the real estate market is in a much better position. You know, almost all American households have rebuilt their nominal net worth to pre-recession values, and the lending standards have tightened while home values have soared. And then, what is even more significant is that the imbalance between supply and demand, it's teetered to the opposite position, meaning right now, we've got more people in the population needing homes than we have homes available.

A lack of inventory is not a precondition for a housing crash. But as buyer demand declines amid soaring costs, it is indeed easing competition. And that could certainly mean a correction is on the way. You see, according to the Census Bureau, U.S. new home sales have declined every single month in 2022. And in March, they fell to a four-month low, highlighting the impact soaring borrowing costs are having on potential buyers. So sales are slowing or maybe they're not because as of just the middle of me recording this, there's a headline that just came up that we just broke this losing trend in 2022. And actually sales showed a little bit of an increase in their rates.

And so the price is still appreciating, albeit a little bit slower, but it's still appreciating. I mean, you're certainly hearing about price reductions, but keep a mind that these are price reductions on houses that have not sold. Now, albeit at a slower rate, well, at least until about 30 minutes ago, the houses that are selling are still selling for more, having set yet another median sales price record in May of $407,600, breaching the $400,000 mark for the first time ever. So rising mortgage rates have taken a notable bite out of demand, but there's still plenty of demand as illustrated in the news today and capable demand at that in the market and it's all driving it forward. But as they say, it can't go up forever. Or can it? You know, 10 years ago,

you probably would have balked at the idea that houses would more than double by now. But here we are. Nonetheless, we can't ignore the mortgage rates if we're going to be prudent fortune tellers. You know, historically, such large movements in mortgage rates have ended with a housing slowdown. and it'd probably be wise to brace for a soft landing, at least, meaning a slowdown to a much less frantic pace, but very likely an upward pace still, unless shelter somehow goes out of fashion. The reversed supply and demand imbalance of 2008

will support property values and maintain a relatively healthy market, even amid the multitude of economic uncertainties we're all experiencing. A slight and short-lived real estate market correction, it's probable. But a market crash, It's nice. And if you'd like to position yourself on the right side of the market and build your passive income and wealth and the way that more people have been able to do it than with anything

else, you'll probably like what we've put together over at rei-aise.com. So head over there, take a look. If you like what you see, answer a few questions about your real estate ambitions, and then just pick a time for us to hop on the phone so we can brainstorm some new real estate investing ideas for you. R-E-I-Ase.com. Please stand by. We've got overhead.

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Remember that person that gave up on their real estate investing dreams? Neither do I. Let's keep going. Back to the show. What is Metaverse Real Estate? I mean, I've been hearing about it, and I want to know, and you're likely watching me right now because you want to know too. By the time we're done, you'll know what Metaverse Real Estate is and why you might want to invest in some. Oh, and by the way, if you'd like to dive in and take some real action right away and flip a house in just one day in the real world, using my funds to do it, I'll show you how you can pull this off in your market right now at matsfree training.com.

All right, it's no secret that the real estate market is skyrocketing and it has been, but the COVID pandemic created another little known land rush that no one's really talking about. Well, not many. Some investors, while locked down, were paying millions for plots of land. but not in New York or Beverly Hills. In fact, the plots do not physically exist here on Earth. Rather, the land is located online in a set of virtual worlds that tech insiders have dubbed the Metaverse. And prices for these plots have soared as much as 500% in the last 12 months or so.

I mean, this all happens when Facebook announced it was going all in on virtual reality. I mean, they even changed their corporate name to meta platforms. So what is Metaverse real estate? Well, Metaverse real estate are parcels of land in virtual worlds. In the simplest sense, they are pixels. However, they are more than just digital images. They are programmable spaces and virtual reality platforms where people can socialize, play games, sell NFTs, attend meetings,

go to virtual concerts and do countless other virtual activities. And in these virtual worlds, real people interact as cartoon-like characters called avatars, similar to a real-time multiplayer video game. And today, people can access these worlds through a normal computer screen. But Meta and other companies have a long-term vision of building 360-degree immersive worlds, which people will access through virtual reality goggles like Meta's Oculus. And with the rise of the Metaverse, digital real estate is expected to grow and expand as well. In fact, there was a Metaverse real estate boom in the last quarter of 2021 after Facebook changed his name to Metape and indicated a focused interest in the metaverse.

and that boom has not let up either. As its popularity continues to grow, the value of Metaverse real estate is forecasted to have a compounded annual growth of 31.2% from 2022 to 2022 to 2008. And that type of annual growth might be enough to answer the next question. Why purchase Metaverse real estate? Well, Metaverse real estate gives users a place to connect online with other people. Individuals can use their digitized land to play games and socialize.

Creators can monetize the content of their property by charging for access or trading their NFTs, and brands can use their virtual properties to advertise services, organize virtual product launches, and provide unique customer experiences. For real estate investors, these parcels of digitized land offer a lucrative opportunity. I mean, just like in real life, Metaverse properties can be developed and flipped or leased. Indeed, there are many possible use cases for Metaverse real estate. So if you can do all that, what type of money are we actually talking about here? Let's talk money.

Real world dollars in a digital world. When Decentraland, one of the more popular Metaverse platforms to date, held its first land auction at the Terraform event in December of 2017, a parcel of land cost a mere $20. Those parcels sold for an average of over $6,000 in 2021. By the start of 2022, the prices had skyrocketed to approximately $15,000 per land token. So we're not talking chump change, but we're not talking about anything out of reach for most people either. With the positive outlook on Metaverse growth, companies have been heavily investing in virtual land.

In October 2021, Tokens.com, a blockchain technology company acquired 50% of virtual real estate company Metaverse Group for $1.7 million. In November, the Republic Realm broke records when it purchased a property in the sandbox for a whopping price of $4.3 million. The heightened interest in Metaverse properties has caused prices to increase even further. Digital land sells from $6,000 to $100,000, but some are being sold for even more. You know, one of the biggest sales this past year is a property adjacent to Snoop dogs in the sandbox. You see, Snoop is building a virtual mansion on one of his plots, and an anonymous buyer purportedly bought it for $450,000, almost a half a million bucks. And there are a recent report by Crypto Asset Manager, Grayscale, estimates the digital world may grow into a $1 trillion business in the very near future.

And celebrities are taking notice. I mean, major artists including Justin Bieber, Ariana Grande, and DJ Marshmallow are performing as their own avatars. Even Paris Hilton DJ at a New Year's Eve party on her own virtual island. So purchasing a Metaverse property works pretty much the same way as buying an NFT. your deed of ownership is a unique piece of code on a blockchain. And this code is what certifies your ownership or rights over that piece of digital land. Like real-world properties, you can purchase Metaverse land through a marketplace like OpenC. Think of it as a combination of the MLS and eBay.

Or you can purchase through brokers and property managers. Unlike in the real world, though, Metaverse brokers don't need licenses and are under no regulations. So make sure that you transact with reliable ones. The majority of Metaverse real estate exist within the Big Four. These are the major players in the Metaverse economy, and they include

Decentraland, Sandbox, Somnium Space, and Cryptovoxels. These platforms own a total of 268,645 parcels, which are among the highest-priced ones on the market. And then, aside from the Big Four, there are now more than a dozen platforms selling Metaverse real estate there.

Other alternatives include Axi Infinity, Star Atlas, and Bit Country. And just like properties in the real world, it's all about location, location, location, as in the Metaverse location plays a factor in the value of the land you choose too. So if you plan on investing in Metaverse real estate, look for areas that have the potential for development.

Places where people can potentially congregate will be more valuable than those in nondescript areas. So consider plots of land near, but not within developed districts, because you can score these properties at relatively low prices. You can build on them, and they just kind of wait for prices to drive up. And if you think this is all ridiculous, up to this point, let me share some stats with you.

The very stats that have me taking the time to learn about it and share with you what I've found. The sandbox grew by 15,000 percent in 2021. It also had the largest transaction volume in the same year with a total amount of $350 million for 65,000 transactions in virtual real estate. And in 2021, collectively, the Big Four sold five, $501 million of real estate and that number has been predicted to double to $1 billion this year. So the total market value of Metaverse real estate in 2020 was $47 billion and has been

forecasted by the same appraisal firm to reach $828 billion in 2008. That's pushing a 20x return. Now, the average price of a parcel in major Metaverse platform since January of 2021 has increased from $1265 to $12,684. That's a 10x increase in the $10x increase. 12 months. And if you think you're late to the party, Metaverse real estate investments come from only 25,000 or so individual crypto wallets. There aren't that many players in the game yet. You're early. Most statistics right now on Metaverse real estate appear to be very positive. They indicate

massive gains for early settlers on the virtual platforms. However, you must keep in mind that these worlds are new and not yet fully established. The numbers may be tempting, but you may have to delve further and look beyond the statistics. So before you make any investment decision, consider this. The standard piece of advice given is, do not invest any more money into crypto than you're prepared to lose. You could apply that same logic to Metaverse real estate. You know, I've been following that advice and heeding to it close since 2017.

And in hindsight, that advice has probably cost me millions, at least. So I'm not telling you to go all in. I'm just sharing with you how asymmetrical the relationship between. the risk and rewards have been for me up to this point. You know, hindsight is 2020 and tomorrow is not promised. So do with that information what you wish. You know, I haven't made my first Metaverse real estate investment yet, but I'm getting really, really close.

And so I'll let you know when I do and I'll let you know how I'll go. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you, and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream.

Yeah, yeah, we got the cash flow. You didn't know home, boy, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.