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2021 was the biggest year for cryptocurrency since Bitcoin's introduction in 2009. Bitcoin’s growth has made it a practical currency for everyday commercial transactions.
Cryptocurrency is gradually being accepted for large-scale investments like real estate. Over the next few years, the new currency and its underlying technology may revolutionize the way that real estate transactions are done.
The appeal of bitcoin partly lies in the technology it uses — the blockchain, a virtual ledger distributed to a wide network of users. Blockchain transactions are verified by many parties that have copies of the ledger. For this reason, it’s harder for outside parties to hack or infiltrate the blockchain.
Users consider blockchain transactions to be more trustworthy and less susceptible to fraud. They’re also fast, since they don’t use centralized banks or middlemen to approve transactions.
Bitcoin and the blockchain have made inroads in the real estate housing market with an eye toward the future.
Real Estate: In recent years, real estate agents have started to see the value of Bitcoin's speed and security. The Compass agency listed a $65 million estate in Beverly Hills this summer, accepting bitcoin for payment. A penthouse in a Miami condominium complex recently for $22.5 million in crypto. Two nearby luxury units valued $31 million are also for sale. Some mortgage lenders have even started to accept bitcoin to be used as down payments on new homes.
Rentals: Bitcoin is becoming a secure and fast way for some high-end tenants to pay rental fees, too. Earlier this year, billionaire Rick Caruso began to accept bitcoin for rental payments on his homes and commercial spaces in malls. A Canadian rental platform called liv.rent began accepting cryptocurrency for rental payments, too. Tenants send their monthly rent to the platform, which then distributes the funds in standardized currency to landlords.
Mortgage Refinancing: In July, an escrow company in California completed the first home mortgage refinancing to use bitcoin. In September, mortgage lender United Wholesale Mortgage announced they would accept Bitcoin for payments.
Real Estate Transactions: The blockchain technology behind Bitcoin holds promise for real estate transactions and listings. The built-in validation system can make the home-buying process faster. It can also speed entries on multiple listing services and title searches. "Smart contracts,” publicly recorded purchase terms at the heart of the blockchain, are especially promising. A smart contract can be used for automated rental payments or security deposit refunds.
Is Bitcoin the Future of Real Estate?
Bitcoin still faces some obstacles in its journey toward becoming a form of mainstream currency when it comes to real estate.
Cryptocurrency is still considered to be a volatile investment. It has a history of dramatic value swings, although it may have established a $40,000 "floor." Bitcoin holdings are also subject to capital gains taxes and strict privacy policies.
Still, the Bitcoin genie is out of the bottle for good. Players from all ends of the real estate market are learning how to take advantage of it. If the cryptocurrency's value settles and the real estate market continues to grow, they could be partners for life.