Housing markets are in full swing, but can Blockchain solve real estate volatility? Interview with Parcl CEO Trevor Bacon

After two years of steady price increases, property markets around the world have begun to slow down sharply – and there is little agreement about what’s to come.

This industry is more volatile and faster than ever, with market segments changing as much as 30% in a matter of weeks. For many people, buying a home can be incredibly difficult – or even impossible.

This was the driving force Parcel, the blockchain-based real estate platform that, via the Parcl protocol, enables users to invest in a digital square foot of real estate in the most lucrative neighborhoods around the world.

Benzinga sat down with Trevor BaconCEO and co-founder of parking lotto gain insight into how to make money from today’s volatility in the real estate market through ground-breaking blockchain solutions.

In the face of market volatility, the blockchain-based real estate investment platform Parcl offers a powerful blockchain investment application that provides security, stability and hedging capabilities.

Bacon will speak at Benzinga The Future of Crypto conference on December 7 in New York City.

BZ: How can blockchain provide investors with security and stability in a volatile market?

Bacon: Institutional property buyers are pricing out individual buyers because they are buying homes in record amounts. There is a lack of housing overall, which creates housing inflation. Interest rate volatility creates more volatility in real estate – we haven’t seen an interest rate rise like this in over 50 years.

At Parcl, our mission is to create a platform that allows everyone to have access to property. Parcl provides price exposure or hedging opportunities versus actually taking a physical house and putting it on the blockchain. Parcl is linked to real asset price per square foot which is tracked through the Parcl Price Feed (PPF) and the Parcl protocol.

This provides security and stability in the midst of greater market chaos, giving homeowners and developers an opportunity to secure their real investments while giving investors exposure to the global real estate market, rather than just one specific home.

BZ: What are the financial benefits of combining traditional investment strategies and new technology?

Bacon: Property volatility over the past three years shows the importance of having a platform that provides liquid price exposure to property.

The market is moving faster than it ever has – in both directions!

Real estate is known to be among the most consistent investments, but the barriers to entry are very high and getting higher every day. By using blockchain and a synthetic property format, we lower the barriers to access the asset class.

Previous models – such as fractionation – require significant capital upfront and then time to close, limiting scale.

BZ: Since the start of the COVID-19 pandemic, we have seen volatility increase across the real estate market, but the many current metrics are notoriously slow and delayed in data delivery. How accurate is the data coming out now about the real estate market? Looking for an alternative to track real estate prices with timely information?

Bacon: The current data standard is far too backward and does not accurately capture major trends that have emerged in the real estate market over the past five plus years.

It is disturbing that important guidelines and decisions are made on poor quality data that tracks a fundamentally different market than what is actually happening today.

Parcl Labs is our data and AI effort. We believe that our data is the most accurate and timely available on the market. It is updated daily and tracks all activity happening on the ground within any geographical boundary.

For context, benchmarking standards such as Case Shiller leave out over half or more of the data that determines residential real estate prices. Over the past five years, for example, the typical turnaround time for homes has been cut nearly in half, and much of the market has turned around in six months or less. This is due to an influx of new, active players such as institutional buyers. Case Shiller omits these transactions from the index.

The Case Shiller is a lagging indicator for single-family homes only.

It is updated at the end of the month for two months before. At the end of October, we will finally see figures from August.

Traditional analysis methods that rely on outdated and incomplete data sources lead to inaccurate pictures of the housing market. We see the consequences of this with data points such as CPI and OER (owner equivalent rent) which show the state of housing prices and rental prices from the end of 2021/beginning of 2022.

The most consistent fiscal policy decisions in the world are made on the basis of this data. For us, that is not acceptable.

This story is part of the Benzinga Future of Crypto 2022 Summit related content. Bacon is among the speakers at Benzinga first crypto conference December 7.

Cover: Ilona S from Pixabay.