4 min read
Metaverse Mortgages Will Affect Virtual Reality Estate in Three Ways

If you were lucky enough to get into metaverse real estate in the first half of 2021, you might only have needed a few hundred dollars to buy the lot you wanted. What a difference a few years makes. Although this is still possible on some platforms, the most popular platforms with land for sale, such as Decentraland and The Sandbox, now require thousands of dollars just to purchase a small plot of land in a residential area.

With such rapid price growth, one of two things was bound to happen: either prices would plummet as interest rates fell, or someone would devise a way to make a secured loan to encourage more of these purchases. And, because interest in the metaverse appears to be growing, we got the second thing. A few brave companies are experimenting with different ways to write loans backed by NFTs, and as word spreads, the metaverse will catch fire.

There are many ways in which this will affect virtual real estate in the coming year (and beyond).

A. More interest in metaverse real estate will be generated

Many people are wincing right now as they look at the prices of metaverse real estate, unsure if they're willing to part with so much money for a piece of real estate they'll never see in person. Despite the absolute rocket-like velocity of value growth, paying $15k for a lot in Decentraland, for example, may seem excessive.

A $15k mortgage on an NFT may seem like a completely unique thing, especially to a curious user or a metaverse real estate investor. If you can borrow against your crypto coins or, better yet, your other metaverse holdings, you'll be able to buy more and more real estate faster, before prices skyrocket once more.

Every day, new virtual real estate enthusiasts consider what is possible for them, their budgets, and the worlds they are exploring. These mortgages would make it easier for them to become homeowners now that they've made it this far. They'll tell their friends about it, and the virtual world will grow because of their unique experiences.


B. The faster the metaverse grows, the more people who believe in it.

Being able to finance metaverse real estate is another way to stimulate interest in the metaverse, just as having more affordable and accessible mortgage lending leads to higher rates of homeownership. Even if the ownership is because of a loan with monthly payments, it creates a sense of community. In a place like the metaverse, building a community can mean a lot of different things, but one thing is certain: it means growth. What are your thoughts on that? That's fantastic, because the metaverse is so much more than a collection of games; it's a whole new world for people to explore and meet new people.

When people invest in neighborhoods, both online and off, they attract more people with similar interests and desires, and the value, desirability, and amenities of the entire neighborhood increase. In the metaverse, there's a lot less to worry about with things like crime than there is in the real world, but a neighborhood can still decline because of disinterest.

C. Younger players climb the real-world property ladder.

Please bear with me here; I know it sounds like I'm wearing banana pants. However, there are many people who cannot afford to purchase physical real estate, which is unfortunate because they appear to crave the commitment that comes with it. Because they cannot purchase physical property, they also cannot benefit from the equity gains that are common in the real-world real estate market.

However, if they can purchase something more attainable while also gaining equity, such as a virtual house or even a metaverse shopping mall, they'll have something. These are people who already spend their free time in some kind of virtual world; they might as well invest in one and watch their money grow.

There's a sense of pride that comes with owning real estate, whether it's real or virtual, and this should eventually become an asset class that can help these people progress up the real-world property ladder. Instead of a small two-bedroom starter home, the property ladder could begin with a small residential lot in a virtual world, providing younger people with something they can invest in and sell for real-world money, eventually leading to more routes to real-world real estate ownership.

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article by Amit Caesar:

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