Millennials – the generation born between 1981 and 1997, according to think tank Pew Research Center – are reshaping the global housing economy and making homeownership a status marker of the past.
In the U.S., record-high student debt and tighter post-crisis lending rules have delayed home buying for many young adults, causing the overall homeownership rate to plummet to its lowest level in over 50 years, according to 2016 U.S. Census data. Furthermore, real estate experts predict that this drop will continue through 2025.
But on a more elemental level, the housing habits of Generation Y also speak to a rejection of the materialistic values of previous generations. While their 20th Century predecessors inhabited an era of brand worship and hyper-consumption, Millennials’ sensibilities have evolved, giving way to a new era of collaborative consumption, according to authors Rachel Botsman and Roo Rogers.
In their 2010 book, “What's Mine Is Yours: The Rise of Collaborative Consumption”, Botsman and Rogers write that this collaborative model, also known as the sharing economy, is “enabling people to realize the enormous benefits of access to products and services over ownership, and at the same time save money, space, and time.”
In a world where Millennials are prioritizing experiences over stuff, it follows that the fabled American dream no longer requires homeownership. Instead, Millennials would rather use funds that would have traditionally been held hostage by mortgage payments to travel the world, become bourbon connoisseurs or rock out at music fests.
Globally, a 2017 HSBC Study of Millennial homeownership in nine countries found that 40 percent of young people owned their home on average, while Generation Y only accounted for 35 percent of homeowners in the U.S.
Additionally, with housing-value increases significantly outpacing wage growth in most countries, renting has emerged as the most viable solution for the majority of Millennials around the world, with the exception of China.
Generation Y has been a primary driver for the boom in the private apartment rental market domestically and internationally, according to real estate trade organization Appraisal Institute and global property consultant Knight Frank, respectively.
But the mad dash into rental properties by young adults has created vast market dysfunctions that distort the balance of supply and demand, adversely impacting tenants and landlords alike. The problem is transparency – a void that has long defined a real estate industry dominated by insiders and relationship networks that exploit information gaps to the detriment of everyone else.
To fix issues in the rental-housing market, technologists are devising new data-driven solutions to empower young renters and refine tenant selection for landlords. Rentberry, a long-term rental application built on consensus blockchain ledger technology, is one company leading this innovation charge.
The Blockchain is a decentralized and unhackable database that underpins bitcoin, the most popular cryptocurrency, and which is being used to create new smart-contract platforms like Ethereum and others. As an Ethereum-based application, Rentberry users transact in bitcoin or ether, Ethereum’s proprietary currency, to honor rental agreements.
The company’s emergence coincides with the cryptocurrency boom that saw bitcoin surpass $6,000 in October and a transformative real estate market that is increasingly accepting virtual currency to fund property purchases.
Developed by Alex Lubinsky, Lily Ostapchuk and Aleksey Perfilov, Rentberry embodies the rich cross--section of the founders’ backgrounds in finance, real estate and software engineering, respectively.
Lubinsky, the chief executive officer, says he was inspired to create the concept at the end of 2015, after a frustrating, month-long ordeal of trying to find an apartment in San Francisco, the most expensive rental market in the world.
“We lost so many apartments to other applicants because there was no transparency in the
rental process and we had no idea if there were other applicants willing to offer more than the
original asking price requested by landlords,” he says.
The concept is a “game-changer” because it brings transparency to the obscure and “trustless” long-term rental space, according to Lubinsky. The platform allows tenants and landlords to track demand for apartments in real time, enabling users to make smarter decisions about where to apply for housing and how much to charge for rent.
Lubinsky says this real-time, property auction system is the reason agreed rents are generally 5 percent less than landlords’ original asking price on his platform. But perhaps more innovative is the compny’s crowdsourced insurance network, which enables qualified tenants to unfreeze up to 90 percent of their security deposits through smart contract mechanisms.
To date, Rentberry has over 100-thousand users and lists 160-thousand properties in nearly five-thousand cities in the United States, according to Lubinsky. He says the company has raised $4 million primarily from venture capital sponsors.
But on November 20th, the platform will conduct an Initial Token Sale, which will allow everyday investors to participate in the company’s global value proposition.