Buying and selling real estate in the metaverse

With Facebook pivoting to the metaverse, real estate activity is picking up in this realm:

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In October, Tokens.com, a blockchain technology company focused on NFTs and metaverse real estate, acquired 50 percent of Metaverse Group, one of the world’s first virtual real estate companies, for about $1.7 million. Metaverse Group is based in Toronto but has virtual headquarters in a world called Decentraland in Crypto Valley, which is the metaverse’s answer to Silicon Valley. Decentraland also has districts for gambling, shopping, fashion and the arts.

“Rather than try to create a universe like Facebook, I said, ‘Why don’t we go in and buy the parcels of land in these metaverses, and then we can become the landlords?” said Andrew Kiguel, a co-founder and the chief executive of Tokens.com…

For those wondering why a company would want to invest in a virtual office in the metaverse, Michael Gord, a co-founder of the Metaverse Group, said that skeptics should look at the trends catalyzed by the pandemic…

The Metaverse Group has a real estate investment trust and it plans to build a portfolio of properties in Decentraland as well as other realms including Somnium Space, Sandbox and Upland. The internet may be infinite, but virtual real estate is not — Decentraland, for example, is 90,000 parcels of land, each roughly 50 feet by 50 feet. Among investors, there’s a sense that there’s gold in those pixelated hills, Mr. Gord said.

Let the artificially-induced-scarcity-fueled-boom begin!

Seriously though, this offers an opportunity to acquire real estate that otherwise might be very difficult to find online or offline. In the offline world, how often do significant new parcels of land or developments come available? If they can be bought, they are not cheap, they probably attract a lot of interest, and there might be restrictions based on what is already there or what is possible on the site. In the online world, it could be difficult to predict where users might show up, how long it could take for sites to develop, and what it all might be worth?

In the meantime, investors and speculators will wait and see what happens. The bet could pay off massively: if the metaverse is successful with a few years or even a decade or two, those who got in early in prime locations with the right offerings could gain a lot. And if the metaverse does not develop in this way or other factors go awry, the money lost will be in a long line of those who hoped for the best with property and nothing materialized.

iBuyers look to ramp up home purchases

Several tech companies are looking to purchase more American homes:

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“Our financial goal is to drive rapid growth at scale with sustained improvement in our profitability,” Opendoor, the industry pioneer, wrote in its letter to shareholders this week. After going public last year, Opendoor has now expanded into more than 40 markets and purchased 8,500 homes in the second quarter, more than any other quarter by almost 50%. The company, which is reportedly searching out a new $2 billion revolving credit facility, also announced this week that it is now willing to purchase the majority of homes in every one of its current markets.

Zillow announced similarly ambitious plans during its recent earnings call. While it bought only 3,800 homes in the second quarter, Zillow is gearing up to scale massively through the rest of 2021, saying that it expects its Homes division to bring in around $1.4-1.5 billion in revenue next quarter, roughly double what the division made this quarter…

iBuyers say that in exchange for money they offer convenience, quickly offering a number to homeowners who, if they accept, can then pick their exact move-out date, avoid showing their home, and use the money to immediately go house hunting. (Zillow says its goal is become a “housing market maker.”)…

Still, it’s difficult to deduce at this early moment whether adding high-tech firms to the real-estate market will be a net positive or negative for the typical American family, said Roberto G. Quercia, a professor of city and regional planning at the University of North Carolina at Chapel Hill. Residential real estate remains the dominant form of wealth for such families, making up roughly 70% of median household net worth, so the answer could have potentially enormous ramifications for the country.

The biggest factor seems to be the marriage of tech capabilities and money. There are other actors in the market who have plenty of cash to use. There are plenty of websites and apps for real estate. Does putting them together offer unparalleled convenience or particular knowledge through algorithms and real estate data?

There are multiple sets of consequences to figure out. As the article notes, it is not clear if these new home selling options benefit consumers. More options or more competition could be good. What do other actors like lenders, developers, and realtors think about this? Additionally, many communities might have concerns about institutional buyers who can leverage technology and scale but do not necessarily have local knowledge or concern about local markets. Could these actions drive up prices beyond what regular buyers could afford?

3D printed houses under construction

To address affordable housing in Florida, one company is trying 3D printed homes:

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After purchasing a plot of land in the Griffin Heights neighborhood, the couple reached out to Printed Farms, a Florida startup that has access to the Danish manufacturer COBOD’s construction 3D printer, to head the innovative project.

Work began Thursday on a plot of land in northwest Tallahassee area and is expected to finish by Friday. The automated printer can lay up to two feet of wall a day.

Once initial construction on the three-bedroom, two-bathroom house wraps up, it still won’t be ready for its first owner until it has furnishings installed, which may take an additional eight to 10 weeks.

The house will cost between $175,000 and $200,000 depending on its appraisal and area median income affordability, Light said. 

Once there are some completed homes, this will provide opportunities for builders and possible homeowners to consider them. I wonder how much of the devil is in the details. What is the materials and labor cost compared to traditional methods? How long will these homes last? Will the appearance and experience of the home be similar to traditional construction? How much faster could such homes be constructed? How many people would want to be among the first to try them out?

Of course, if this can help address affordable housing needs, it could be a big deal. Alongside tiny homes, ADUs, and other innovations, many communities in the United States need more quality and cheaper units.

Touring the most expensive American homes on YouTube

There is an appetite for seeing the homes of the rich and famous. See the popularity of showing these homes on YouTube:

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Mr. Yilmazer, 31, isn’t a wealthy buyer, nor is he currently a real-estate agent. Rather, he is one of a handful of real-estate YouTubers, amateur video hosts and producers, who are bringing regular people, via their laptops or cellphones, inside the mansions of the megarich. With more than 820,000 subscribers on his YouTube channel, Mr. Yilmazer’s videos rack up millions of views and inspire tens of thousands of comments…

In some ways, real-estate YouTubers like Mr. Yilmazer are providing today’s answer to the MTV Cribs phenomenon of the early 2000s, offering the masses a rare glimpse at how the 0.1% really live. But rather than getting a peak through the eyes of a movie star or a suave celebrity real-estate agent, like on shows such as Bravo’s “Million Dollar Listing,” they’re seeing these houses through the eyes of a regular guy just like them…

Mr. Yilmazer said he is bringing in between $50,000 and $100,000 a month in revenue from his YouTube channel in ad revenue alone, putting him on track to bring in more than $1 million this year if the growth of his channel continues at its current pace. Those are just the revenues provided by YouTube for allowing their automated ads to stream on the channel without any effort from Mr. Yilmazer’s own small team. On top of that, he and his team can make money from dedicated sponsorships—Mr. Yilmazer will personally feature a particular company’s brand in his videos for a fee that runs in the tens of thousands of dollars—and the money real-estate agents offer him to feature their listings on his channel. He said he often won’t charge if a property is particularly spectacular and will drive viewership to his channel. If a property is less impressive, he charges a fee, which typically runs into the five figures…

Still, not everyone is sold on letting YouTubers have free rein in their properties, since some agents believe that prospective buyers would prefer that their future homes not be splashed all over the internet.

It is the Internet, expensive real estate, and making money all in one. What could more American than that in 2021?

The money angle is very interesting to consider. The owner of the big expensive home could benefit from more exposure (though the article notes that not all big home owners think the YouTube views benefits them). YouTube gets original content that plenty of viewers want and they can monetize the content through advertising. The presenter can develop a brand and bring in a good income. Does anyone lose here?

One potential downside: how Americans view homes. If people consistently see large luxurious homes on television, as sociologist Juliet Schor argues in The Overspent American, or on social media, does this ratchet up their expectations about what they should be able to acquire? The biggest homes are out of the reach of almost everyone yet some of the individual pieces or features might find their way to a more attainable range.

People using localized social media for an edge in searching for homes

Scroll through local Facebook or Nextdoor groups and there is a more common request these days: does anyone know of an upcoming listing for a 4 bedroom home in a desirable neighborhood? Or, perhaps a three bedroom townhome or house for rent at a reasonable price?

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It is hard to know how many good leads are generated by such posts. They often ask for DMs. Generating more competition for such housing is probably not the goal – though landlords or sellers might be interested in drumming up more interest (also evidenced by pictures of homes soon to be on the market). The more direct interaction cuts out some of the middle actors.

Judging by the posts I have seen, the housing needs seem to be present. Even with economic instability during COVID-19, homes in desirable neighborhoods and communities have held their value or increased in value. The housing supply is limited. At least a few people have looked to move out of cities to quiet suburbs. Stories of bidding wars abound. Finding places at reasonable rents is hard.

I could imagine some broader partnerships between the socials and real estate websites. Imagine a special Zillow add-in to your Twitter feed or a Realtor.com bonus for Instagram. All of the real estate websites are competing and so are the social media platforms; which one can truly integrate real estate into their daily feeds beyond the posts of individual users? Say you are looking for a home with particulars and the social media plug-in can alert you to matches and you can get an exclusive bidding window; potential buyers could feel they get an in and realtors might like the added competition among buyers ready to spend.

All of this might matter less if there is more housing supply in the future. Yet, if real estate is truly so lucrative because there is only so much land in the first place, why wouldn’t it permeate even social media.

Even Lucy Van Pelt knows the value of getting into real estate

To close a scene of A Charlie Brown Christmas, Lucy Van Pelt explains what she really wants for Christmas:

A Charlie Brown Christmas

Lucy: Don’t worry. I’ll be there to help you. I’ll meet you at the auditorium. Incidentally, I know how you feel about all this Christmas business. Getting depressed in all that. It happens to me every year. I never get what I really want. I always get a lot of stupid toys and a bicycle or clothes or something like that.

Charlie Brown: So what is it you want?

Lucy: Real estate.

In addition to the words of Lucy, I recently heard a famous person describe their interest in real estate this way: “they aren’t making any more of it.” I have heard some variation of this numerous times in life. Since there are limits on how much real estate can be had, this can push prices up in places where there is high demand and limited property. (Of course, humans are pretty good at finding ways to create more real estate – think in-fill in many coastal cities – or finding financial opportunities out of what exists.)

If you have resources, real estate can be a good investment. Not only might you be able to use the property while you own it or gain money from its particular use, its resale value could be good. But you have to start with real estate or have the capital to get into real estate to reap the rewards down the road. Not all real estate is desirable – see a recent overview of some such properties in the Chicago area – even as many Americans assume that purchasing a home will pay off in the end.

And perhaps this hints at Lucy’s frustration. She keeps getting Christmas gifts for kids when she really wants to get ahead. Real estate would be a unique but wealth-building present. Forgot those ads with a car in a bow in the driveway: Lucy wants a property deed under the tree.

Bringing McMansion critique to TikTok

McMansionHell was a web favorite when it launched. Now criticizing McMansions works on TikTok:

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TikTok user @cyberexboyfriend is every realtor’s worst nightmare.

On his account, which boasts 32,000 followers and counting, he hosts a popular series in which he tears apart random McMansions he finds on Zillow.

It all started on Nov. 3, when @cyberexboyfriend posted a video captioned “roasting homes on Zillow.”…

Easily the funniest and most viral video in the series to date is the one in which @cyberexboyfriend critiques a $675,000 four-bedroom home, also located in Mckinney, Texas.

It is easy to criticize McMansions. They can have cartoonish features, ranging from turrets to garish facades to oversized garages to odd proportions. Much effort is put into their facades with less attention paid to other sides of the home. The interior may have some questionable choices. In an era of hot takes, social media, and concerns about housing and inequality, a quick skewering of a McMansion draws attention.

On the other hand, these real estate listings are for real homes. Numerous American communities, often wealthier suburbs, have McMansions. And at least a few people are willing to buy them.

Does this approach to McMansions help more people avoid purchasing such homes, either because the social stigma is potentially higher or because they are alerted to the problems with McMansions? Or, does it reinforce existing views people have about McMansions?

I have suggested before that if people had to choose between modernist homes and McMansions, they might choose McMansions. Those who criticize McMansions publicly are not likely to live in or near such homes. If you are against McMansions, you might also have concerns about sprawling suburbs and instead prefer denser suburban communities and cool styles like midcentury modern, interesting ranch homes, or older more traditional styles.

This may ultimately come down to taste in single-family homes based on social class, access to resources, and experiences with different kinds of communities. While political polarization in the suburbs is real, polarization by home style could be present alongside it.

Online real estate shift during COVID-19 reinforces the private nature of American homes

The ways in which COVID-19 has pushed more real estate activity online – virtual tours, making offers without physically seeing a home – doubles down on the private dimensions of residences in the United States. Here is my argument:

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Already, Americans tend to see their homes as castles, refuges from the outside world, spaces where they can do what they want, settings in which they tend to their immediate family and consume a lot of media, financial investments for their future. Add this to suburbs devoted to homeownership and driving and the home is truly a private place.

The downside is this: there is often limited community and civic engagement. Neighbors get along by pleasantly or passively leaving each other alone. Private spaces are very distinct from public spaces and public spaces where a true diversity of people might actually mix, whether a shopping mall or a library, are relatively rare. Trust in institutions is low and participation in community groups has declined.

Putting homes for sale on the Internet just further reduces the community or neighborhood element of a residence. If you look at enough real estate pictures, you see some patterns: lots of interior shots but limited images of how the residence interacts with surrounding spaces or what may be just down the street. For example, you may get a shot of a backyard but it is often facing the rear of the house, not out into the neighborhood. Or, you might get a pleasant image of the downtown of a community or a local park or a common room within an apartment building without much sense of how those spaces are used.

This is similar to how HGTV often shows homes. There may be sweeping shots of a neighborhood or location but the focus is always on the single housing unit. The interior and its features are the focus. The neighborhood or surroundings do not matter unless it has to do with proximity to work or family or to note the character of surrounding buildings (which is often connected to property values and the perceived niceness of the location).

There are some tools that could help potential homebuyers check out the neighborhood and community. A virtual house tour could be followed by a Google Street View drive through the nearby blocks. Instead of just relying on walkability and school scores on real estate websites, a potential buyer could go to local websites or message boards to try to get a sense of community life. Yet, any of these Internet attempts pale to talking to people in the community and experiencing the surrounding area. People should make some efforts to get to know their community before they consider moving there.

Seeing homes and residences as commodities that can be evaluated solely through the Internet downplays civic life or at least pushes it into the background. Divorcing a home from its surroundings can be done but it is impoverishing in the long run for property owners and communities. When we emerge from a COVID-19 pandemic, I hope the online aspect of real estate does not hamper efforts to rebuild community and social life when such work is sorely needed.

Linking storage facilities and McMansions

One billionaire made money on storage facilities and now he hope to profit from McMansions:

abundance blur bundle close up

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In the depths of the last housing crisis, self-storage billionaire B. Wayne Hughes flew to Las Vegas and Phoenix to lay the groundwork for a new bet. His plan: Buy foreclosed homes, spruce them up and rent them out. He tested his ideas on three houses in each market and then dispatched deputies to buy tends of thousands more across the U.S.

Nine years later the land grab is paying off…

And the rest is behind the paywall. But, the possible connection between these two investments is intriguing:

  1. Both self-storage units and McMansions are relatively recent phenomenon in terms of their scale and regular use.
  2. Americans have a lot of stuff. One answer to having a lot of stuff is to put things in storage. Another solution is to buy a bigger house to put everything in.
  3. Both have architectural quirks. As a kid, I remember more single-story, sprawling self-storage facilities. Now, I see more two to three story buildings – I can think of at least three within 10 miles of my house in built-up suburbia – that look a bit nicer (though are still boxy).
  4. With their architectural quirks, are both of these kinds of structures naked ploys for making money? The McMansion tries to impress and offer as much space as possible for a reasonable price. The self-storage unit facility maximizes the number of storage units and space that can be rented.

Moving away from “master bedroom” and “master bath” in Houston

In the nation’s growing fourth-largest city, the realtor group for Houston will stop using the term “master” on its listing service:

photo of a bedroom

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Earlier this month, HAR replaced the phrases “master bedroom” and “master bathroom” with “primary bedroom” and “primary bathroom” on its property listing database.

The change came after several HAR members called for a review of the terminology.

“It was not a new suggestion to review the terminology,” according to the statement HAR sent its members. “The overarching message was that some members were concerned about how the terms might be perceived by some other agents and consumers. The consensus was that Primary describes the rooms equally as well as Master while avoiding any possible misperceptions.”…

“You may still use the term ‘Master Bedroom’ or ‘Master Bath’ as you feel appropriate in your marketing materials and in the Public Remarks, Agent Remarks, and photo descriptions,” according to the statement HAR sent its members.

Three quick thoughts:

1. Given the social and political climate, this is not a surprising move. And yet, the group said this concern has been raised before and the term is allowed in materials outside of the property listing database. I suppose this is change over time but it is incremental and limited.

2. Real estate is said to be about location, location, location. Realtor groups across the United States are organized by geography even as there is a National Association of Realtors. The local groups can act somewhat independently; in the past, local groups limited blacks and other minorities from moving into certain places. Would the National Association of Realtors strike master from their listings and other materials or would this have to happen region by region?

3. The Houston area presents an interesting case for this change given its demographics. The region has sizable Latino, Black, and foreign-born populations. Will such a change real estate or will the slow transition away from using master (#1) barely register?