Cryptocurrencies are cooling investment in real estate
If we recall events in the real estate market from about a decade ago, it could best be compared to mass sports. It was an event in which everyone participated – trained and untrained people, young and old, knowledgeable sports enthusiasts and also those whose only motivation was to be better than their neighbors. Perhaps taxi drivers, although it seems that representatives of this profession have somewhat undeservedly received excessive attention in the real estate market. In any case, the fuel for the boom back then was the fact that people from almost all professions, age groups, nationalities, and genders were throwing wood into the fire.
Returning from the past to the present, talk of overheating in the real estate market has been going on for several years now. Yet it seems that nothing significant has happened; the market has developed along its natural course, people have become wealthier and want to improve their living conditions. The trend has been upward for years, and the list of reasons for this is quite long, ranging from the poor condition of the housing stock to wage growth and favorable interest rates. If we were to compare the entire market playfully to a balloon, it has remained stably filled with air, quietly rising upward, but there has been no explosion so far. There have been those trying to poke it with a needle, but without success thus far.
One root cause is a fact that has been little discussed so far – that what is happening in the real estate market has not yet become mass sports this time around. That risk existed around 2015-2016, when crowdfunding projects picked up momentum and masses became small investors. Earning a 15% return was tempting, but soon, generally the twenty-something generation discovered that even this was not enough, because on financial markets it is possible to earn 150% returns. The talk is primarily about cryptocurrencies, but to a certain extent also about stock investments. Real estate is part of the investment world, and there is nothing to be done if conservative and slightly boring concrete and wood lose their place in the survival competition for investments to the modern world, where the keywords are Bitcoin, Ether, ICO, and token. Financing methods using blockchain technologies and based on virtual currencies are significantly "sexier" for the new generation both in their nature and in terms of their return potential.
Real estate remains a sufficiently hot investment overall, clearly in first place when considering the entire population, but is increasingly becoming the domain of the older generation. Among real estate buyers, members of the Y-generation dominate, but in terms of investment interest the trend is rather such that the younger a person is, the more they look toward different financial instruments. This is where the Estonian real estate market competes with worldwide cryptocurrencies and the entire blockchain technology for investment money. These are powerful competitors; you can believe in them or not, but in any case they have helped ensure that the Estonian real estate market maintains reasonable development and investors do not start grabbing up every overpriced or low-quality property. If Warren Buffett or some other legendary investor is to be believed, who believe the cryptocurrency market is near the end, then when that scenario is triggered, a new opportunity opens up on the real estate market in the direction of the Z-generation. Real estate, thanks generally to its stability and liquidity, has been a valued asset class worldwide for decades and will remain so in the future.
