Earlier this year, news broke by Redfin that a surprising 12% of purchasers had invested in and sold cryptocurrency to finance down payments. This more than doubled 2019’s number, 4.6%.
This two-fold jump was part investor savviness, part lockdown-born boredom. “With extra time and a lack of exciting ways to spend money, many people began trading cryptocurrencies during the pandemic,” said Redfin Chief Economist Daryl Fairweather.
The young were particularly restless. Millennials now account for more than half of new mortgages. This same age group – roughly ages 25-40 – has embraced crypto quicker than their elders. Nearly half (49%) of Millennials now feel comfortable trading crypto, and 12% see crypto not only as a solid investment option, but the best investment option.
And while no reliable data exists on the frequency of cryptocurrencies being used to place down payments rather than merely fund them, most experts agree that such instances are rising sharply – with no ceiling in sight.
For the real estate community, the takeaway is that crypto’s part of the overall pie will continue to increase. Cyber-currencies once seen as playthings for the wealthy and ultra-tech savvy are now far more accessible. In fact, there are already companies selling tokenized NFTs of real property real estate in some US markets.
Crypto and the virtual world around it are here to stay, and the real estate community should lean into these trends enthusiastically.
Anyone who’s purchased a home understands the frustrating maze of records and documents homebuying entails. Worse, some details – including title histories, prior renovations and inspection records – are frequently inaccurate or incomplete.
Here, it isn’t crypto but rather the technology that enables it that promises significant improvements. Cryptocurrencies operate via blockchains – online ledgers whose entries and edits are visible to other concerned parties. This is one reason agents at my company, Prestige Properties, are becoming Crypto Certified Real Estate Agents.
The result is a system that is both easily regulated and community-policed. No more delayed requests for additional details. No more second- or third-hand notes from anonymous administrators. And while such next-gen systems haven’t been perfected in the housing market yet, the undeniable upsides make them a near-certain eventuality.
… and the incredible advancements in online house tours means more people can see more properties and make more informed decisions. For the real estate market, logged on means game on.
We’ve come a long way from a few pics and onscreen text. Platforms like Matterport have revolutionized the way we research a major economic decision: buying a home.
This is more than a COVID-era stopgap. Like other pandemic-prompted trends – Microsoft Teams meetings, e-commerce’s surge – virtual home tours will become permanent fixtures. The technology has caught up to the intended purpose: a house tour taken from one’s desktop that is exceptionally close to being there in person.
Indeed, URLs have caught up to IRL – and in some cases surpassed it. For example, prospective buyers now have a convenient, real-time means of soliciting input from loved ones (“Hey mom, what do you think of this one?”). They also have a simplified way to take second, third and last looks at prospective purchases as their decision winnows.
The result is faster, more informed homebuying decisions. No longer do “regular folks” need to miss out on placing an offer because an all-cash buyer swooped in and snatched it.
For sellers and agents, the benefit here is obvious: more interested parties leads to more bids, which leads to higher offers.
For example, here’s a place my firm recently sold in Weehawken, NJ. Without the 24/7 accessibility of its dazzling virtual tour, bidding likely wouldn’t have reached asking price. The purchasers were from Manhattan and – a nod to NYC’s insularity – didn’t even know where Weehawken, NJ was (it’s right across the Hudson River from Midtown). However, upon experiencing the virtual tour, they discovered the neighborhood’s charm and convenience for commuting to NYC. By the time they viewed it in-person, it was essentially a second showing – a “last look” that was, physically speaking, a first look.
We’re in the early stages of a real estate revolution – one in which the digital world will overhaul the way we evaluate, purchase and finance homes and other properties.
Savvy companies will get ahead of this curve. For one, Prestige Properties has become the world’s first real estate brokerage to offer agents payment via cryptocurrencies, helping them stay at the forefront of this emerging trend.
Real estate’s financial foundation, mortgage lending, also is experiencing advancements – albeit with growing pains.
While one in seven down payments were funded with crypto holdings, investors with sizable crypto holdings often have difficulty qualifying for mortgages because their conventional assets or annual income don’t meet pre-qualifying baselines.
The issue is exacerbated when would-be homebuyers do not want to sell their crypto to buy the house in cash. They have the capital, they argue, and deserve a mortgage loan based on that capital.
To overcome this obstacle, we’ve partnered with financial companies willing to lend money on a 1-to-1 ratio of crypto holdings. These companies allow homebuyers to use crypto as collateral for a standard, interest-accruing loan. Money always talks – and now, cryptocurrency is having its say.
Another hurdle has been title verification via blockchain. This is proving to be a painstaking process, one requiring municipalities to embrace new ways of doing things in a cohesive fashion – and one that makes an entrenched process obsolete. Getting town officials to move quickly on anything can be a challenge; getting a lot of town officials to move synergistically on something is exponentially more difficult.
But we’ll get there. Again and again, the history of ingenuity has shown necessity to be the mother of invention. Sooner rather than later, such hurdles will be addressed and ultimately overcome simply because the upsides to solving them are so evident and vast.
Better make room: Crypto is moving up and moving in to the real estate market, block by blockchain.
About the Author
Kyle Klaus has been a full-time real estate professional for 17 years. He is an avid real estate investor, broker, and developer. He owns Prestige Properties, headquartered in Hoboken, NJ with licenses in New Jersey and New York. The firm currently consists of 25 real estate professionals, and is growing at a rapid pace. www.prestigepropertygroupnj.com
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