{"id":76679,"date":"2022-06-23T13:40:40","date_gmt":"2022-06-23T20:40:40","guid":{"rendered":"https:\/\/www.redfin.com\/blog\/?p=76679"},"modified":"2023-05-02T14:36:31","modified_gmt":"2023-05-02T21:36:31","slug":"crypto-real-estate","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/blog\/crypto-real-estate\/","title":{"rendered":"Redfin & Money.com Answer Your Top Questions About Crypto Real Estate"},"content":{"rendered":"

Cryptocurrency is changing how we think about money, investing, shopping, and even real estate. That\u2019s why we\u2019ve teamed up with Money.com to discuss how cryptocurrency may influence your next home purchase or sale.\u00a0<\/span><\/p>\n

From comparing the advantages and disadvantages of blockchain real estate loans to expert opinions from Redfin Chief Economist Daryl Fairweather, this article will answer your top questions about crypto real estate.\u00a0\u00a0<\/span><\/p>\n

\"cryptocurrency<\/p>\n

What exactly is cryptocurrency?<\/span><\/h2>\n

Cryptocurrency is virtual money that\u2019s purchased, sold, traded, and stored strictly over the internet. The technology that powers cryptocurrency is called the blockchain. Blockchains, as their name suggests, are strings of data stored across a series of decentralized networks. Every crypto transaction ever made is recorded\u2014for perpetuity\u2014in a blockchain. The data contained in a blockchain can\u2019t be changed, in part because it\u2019s recorded in so many separate places.<\/span><\/p>\n

Who is using cryptocurrency?<\/span><\/h2>\n

Chances are, someone that you know owns or has owned cryptocurrency. Recent data reveals that about <\/span>16% of Americans<\/span><\/a> have, at some point, invested in or traded crypto. Crypto has made deep inroads with younger generations, but it has been embraced by <\/span>consumers of all ages<\/span><\/a>. Some 38% of Millennials say that they have some kind of cryptocurrency investments, Gen X-ers (aged 42-57) are next most likely to invest in cryptocurrency, with 28% of them reporting crypto use. Gen Z is close behind, with a reported 23% of them owning cryptocurrencies.\u00a0<\/span><\/p>\n

Crypto has penetrated a wide range of financial markets, and the housing market stands out as a key example. One of our recent reports found that 11.6% of first-time <\/span>homebuyers liquidated crypto assets<\/span><\/a> to purchase their home.<\/span><\/p>\n

How blockchain technology and crypto are changing real estate\u00a0<\/span><\/h2>\n

To better understand how crypto has impacted the real estate industry and how it may continue to do so in the future, we sat down with Redfin Chief Economist Daryl Fairweather for her insights.<\/span><\/p>\n

According to Fairweather, the percentage of homebuyers using crypto to save for their down payment has increased every year from 2019 to 2022. At the same time, many tech companies are working to streamline crypto real estate transactions in order to make it easier for people to buy and sell homes using crypto.<\/span><\/p>\n

When asked if she foresees the blockchain completely digitizing the traditional real estate process, Fairweather said, \u201cThe futuristic world people envision where you pay for a home with digital currency and the transaction just happens instantly is still years away.\u201d She continued, \u201cit\u2019s a hard jump from everything being on paper, on the county level to everything existing on the blockchain. It\u2019s a cool, optimistic version of real estate, but it\u2019s hard to imagine how we get from A to B.\u201d\u00a0<\/span><\/p>\n

Even though fully digitized real estate transactions across the industry are still years away, some mortgage lenders are taking the first steps by offering crypto mortgages. Previously, the simplest way to <\/span>use crypto funds to finance your home<\/span><\/a> was to convert them to cash. However, a crypto mortgage doesn\u2019t rely on having cash\u2014just crypto. Let\u2019s look at how crypto mortgages work and where you can find one.<\/span><\/p>\n

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What is a crypto mortgage?<\/span><\/h2>\n

Crypto mortgage lenders are <\/span>still rare<\/span><\/a>, but their numbers are growing. The product these companies offer differs considerably from traditional mortgages. Here\u2019s how:<\/span><\/p>\n

While traditional lenders may rarely consider your crypto assets during the loan origination and underwriting process, that\u2019s the only kind of asset a crypto lender will consider. Traditional mortgage lenders also take your monthly income and credit score into account during their approval process, however,\u00a0 that isn\u2019t always the case for crypto mortgage lenders. That\u2019s because the loans they offer are 100% collateralized by the assets in your <\/span>crypto wallet<\/span><\/a>.<\/span><\/p>\n

Here\u2019s another key difference between crypto mortgages and traditional mortgages. With a traditional mortgage, should you spend some of the money you have in your savings or investment accounts, the amount you owe on your home and your monthly payments don\u2019t change. However, with a crypto mortgage, the value of your crypto could change overnight. If the value of your crypto portfolio shrinks, the lender will expect you to make up the difference – up to the amount you owe so your loan remains fully collateralized. Alternatively, a crypto lender might also raise your interest rate or your monthly mortgage payment.<\/span><\/p>\n\n

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Most banks don\u2019t accept cryptocurrency directly when you make your down payment, mortgage payments, or pay other fees associated with your home purchase. Unless you work with a specialist crypto mortgage lender, you\u2019ll need to cash in your crypto for dollars to make your home purchase.<\/span><\/p>\n

What are some of the advantages and disadvantages of blockchain real estate loans?<\/span><\/h2>\n

Let\u2019s start with the pros. Here are some of the reasons why you might gravitate towards a crypto mortgage:<\/span><\/p>\n