# Risks to Homebase In the spirit of transparency, we want to share a few of the external risks that could affect Homebase’s goal of democratizing access to real estate investing and homeownership. ### **Major Recession** Major recessions negatively impact everyone, and Homebase is no exception. If housing prices drop 20-50%, it could change the public’s perception about real estate – that it’s a safe appreciating asset class – and lead less people to feel comfortable investing in real estate through our platform. In addition, major recessions lead to people having less disposable income and shifts their buying power from investments, to survival (food, clothing, housing, etc), rightfully so. Luckily we forecast the probability of that scenario being very low. The likely outcome is that housing prices potentially drop off up to 20%, with disposable income dropping accordingly, before it bounces back and continues to appreciate at a steady state. Multiple data points that make the outcome likely: a) The Fed recently stated that inflation is beginning to fall, b) there is a lack of sufficient housing availability in urban cities, and c) climate change will reduce livable land in the next 10 years. Each of these points lends itself to the conclusion that housing prices will likely recover within the year and continue to appreciate (becoming further and further unaffordable). ### **Prohibitive Regulation** One risk for all web3 companies is prohibitive regulation by the SEC and Congress. To be clear, we’re supportive of regulation, it lays out the rules of the game we have to follow and gives us a clear path of achieving our goal. The risk we see, however, is that in light of the recent exchange implosions (e.g FTX), it’s likely the SEC and Congress will pass additional regulation. Our hope is that the regulation introduced is not prohibitive to DeFi, NFTs, or crypto in general, making our business obsolete. The good news is that we’ve taken a very conservative approach to building Homebase. Regulation is front and center for everything we’ve done, which is why we a) built one of Solana’s first security token offerings to comply with securities regulation and b) are launching as securities from day one rather than finding loopholes to not be considered a security. Ultimately, even if the SEC brings about more prohibitive regulation, our meticulous approach will protect our users from being affected due to the heavy upfront legal setups that we've created. [Join us](https://homebasedao.io/) in redefining the way communities buy, sell and own real estate. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.homebasedao.io/whitepaper/risks-to-homebase.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.