Bitcoin Debuts on Real Estate Finance Scene
Sorohan, Mike firstname.lastname@example.org
Okay. When it comes to buying a house, you have the mortgage sale, the all-cash sale--and now, the Bitcoin sale?
Redfin, Seattle, said cryptocurrencies such as Bitcoin could gain traction in housing markets. At its current value (just under $18,000 as of Dec. 15), someone could purchase the median-priced U.S. home ($292,000) for slightly more than 17 Bitcoins.
Investment in Bitcoin--a digital currency that works without a bank or a middleman--remains highly speculative and highly volatile. Developed in 2008 and first marketed in 2009, Bitcoin debuted to a relatively skeptical global audience. But with addition of blockchain technology to provide security in transactions, acceptance of Bitcoin has grown. Today, more than 100,000 businesses accept Bitcoin as a valid currency.
And recently, Bitcoin has really taken off. Just in the past month, Bitcoin value jumped by more than 200 percent, from $5,870 per coin on Nov. 12 to $17,796 as of Dec. 15. Despite warnings by some analysts of a "crypto-bubble, other analysts suggest Bitcoin could eventually compete against the gold market, Redfin blogger Natalie Schwab said.
Not that Redfin or other real estate finance businesses would accept Bitcoin as a payment--at least not yet. But Schwab noted for some investors, cryptocurrency has created "fast wealth"--and interest in real estate.
Schwab reported agents in Boston, Chicago, Houston, Philadelphia, Washington D.C. and several cities in California said they've had conversations with people about using cryptocurrency as part of their transaction. Carina Isentaeva, a Redfin agent in San Francisco, recently helped a client write an offer on a luxury home in Silicon Valley that was contingent on the sale of cryptocurrency. The offer was accepted, but the buyer ended up backing out when his cryptocurrency didn't sell. Isentaeva said she's confident he will buy when it does.
Jeremy Paul, a Redfin agent in San Diego, also worked with clients who held Bitcoin. He said his clients cashed out two bitcoins, valued at $7,435 each, to cover the closing costs on a home in Carlsbad, Calif.
And homebuyers aren't the only ones in the cryptocurrency game. Redfin reported 75 listings nationwide in which the seller mentioned he or she will accept Bitcoin as payment. The seller of a condo in Miami is requesting payment in Bitcoin only; it will cost the buyer 33 coins.
Bitcoin has come a long way. For example, in January 2016 in San Francisco, the typical home would have cost a buyer 2,805 bitcoins. Today, the median home in San Francisco is 82 bitcoins.
"For buyers who have made a lot of money on the recent surge in cryptocurrency value, buying a home is a reasonable way to use the proceeds," Schwab said. "For sellers accepting bitcoin, however, it's riskier because accepting cryptocurrency as payment is a bet that it's going to continue to increase."
"It's hard to say whether the use of cryptocurrency to buy and sell homes is a long-term trend or just a blip based on the recent spike in value," said Redfin chief economist Nela Richardson. "In some ways, cryptocurrency investors have just won the lottery, and so it makes perfect sense to buy their dream home. On the other side of the ‘coin,' sellers probably wouldn't accept lottery tickets as payment."
The blog can be found at https://www.redfin.com/city/11458/FL/Miami.