Real Estate vs Bitcoin - What Will Happen?

Lets say that all the investors currently in real estate, suddenly realize that it would be MUCH better to be in bitcoin, now and forever more, what will happen to the price of real estate and bitcoin?

This is not a tale of what if, this is all about how fast things will go down.

Lets say that bitcoin is going up 25% a year.
And real estate, is making 20% year (property inflation + cash flow)

I know lots of people in house/apt rentals who can make more that this (but Blockrock/stone REITs are not that)
And i have heard stories that say bitcoin is going to slow its rise, and i have heard stories that bitcoin will 10x this year.

By these numbers, it really doesn't matter which you are in, bitcoin or REITs, but the numbers are already breaking. And that is why i am going to try to outline what happens along this path.

Real estate is going down

I have often said real estate is going down, however, i usually do not mention the short term devastation that will happen to it.

Like, California has allowed cities to decide if they are going to impose rent controls. You know, the rent controls that destroyed NYC? Yes, those are coming to California.

But, what is also coming to California? Earthquakes, floods, fires… and the really dangerous one, insurance companies pulling out of California. To do business in real estate, you need insurance. You can't have a mortgage without insurance. And insurance rates are about to skyrocket. They will eat all the profit from real estate.

If that weren't bad enough, all of the calamities will make insurance payments REALLY SLOW. To some people, they will never come.

On top of that, people will be leaving California. Sometimes in cars, sometimes in caskets. Some will make a run for the border. The housing market in California is toast. Sure, there will still be million dollar McMansion, but they will be dropping in price. And landlords in cities that decide to impose rent controls will not be able to raise rents to cover the increased insurance. There will be a fire sale on real estate… literally.

This will not happen everywhere, but everywhere, property values will be going down. And, without house values going up, real estate will be seen as a poor investment. Well, as long as it is still cash-flowing. If not, it is losing money and losing money.

bitcoin is going up.

Micro Strategies is no longer the only company buying bitcoin
That little country in Central America is no longer the only country buying bitcoin.

So many rumors of people with money buying bitcoin.
Some time soon, bitcoin will take off.

Bitcoin will get to a million dollars per, and then it will become something like, the world reserve currency, or the token that large corporations and govern-cements use to move big amounts.

Bitcoin will not just be worth a lot, it will be, pretty much, money. No need to convert it, sell it, auction it, liquidate it. Its all ready to use.

And there is no expenses to leave it sitting there. No bankster fees. No broker fees. No maintenance fees.

Real Estate vs Bitcoin

In the future, real estate will be a word the world tries to ignore ever existed. And bitcoin will be the unit of measure for the sale of most everything.

Real estate will be costly to keep up, and bitcoin will just sit there.

Bitcoin will expand (increase in value) as the economy expands. Going up, while just sitting there costing nothing.
Real estate will not go up in value. Without money printing making ever larger mortgages, the price will be at best, stagnant. And in most markets, will be going down. (in other markets, it will be burning to the ground)

This will all be apparent to investors in the future.

But, what about the time in between now and then?

This gets tricky because of so many moving parts.

The "migrants" will be caught setting things on fire, and worse. There will be so much anger, that govern-cements are no longer able to "protect" their "migrants" and they will be hunted down. They will be moving south. Leaving behind them a LOT of empty housing and undone work.

Bonds will collapse, fiat currencies on the brink. People will be moving into anything that looks safer. Precious Metals and cryptos. Add into this mess that the SWIFT system will be replaced by blockchain. (probably XRP/Ripple)

As the dollar dies, doing business around the world will be difficult, if not impossible. Enter bitcoin (and other cryptos). International trade will be remade. With escrows/automated smart contracts, international payments will be easier than ever.

Basically, bitcoin becomes everything, real estate becomes something you will have to pay people to take.

It is really hard to imagine real estate dying like that, but that is what happens when the only things keeping real estate going higher has been demographic growth and money printing. Both are ending.

Bitcoin is the winning play. Real estate slowly dies. Or maybe not so slowly.

It will really depend on how fast the cities collapse. If they do not survive the upcoming food delivery hickups, they real estate values there could die, overnight. And there are many other tragedies that may make those cities really bad places to live, or destroy your whole portfolio overnight. (some people will believe that tornadoes are hunting their houses specifically)

It will not be a good time to be in real estate. But, it may be the best idea to ride it into the scene of the crash. Especially if the bank owns most of the equity.

It is really hard to imagine something that has been the backbone of investing for a hundred years, just disappearing.

Just as hard as it is imagining some digital, non-physical, "money" replacing the dollar.

But, we are in strange times.

All images in this post are my own original creations.