A five-year analytical study indicates that owning cryptocurrency offers a bigger return on investment than owning land, commercial property, or a single-family home.

Real Estate Ownership Long Considered a Fundamental Component of Growing Financial Wealth

Investment in real estate, whether that real estate is a single-family home, land and/or commercial property has long been the path towards achieving financial wealth and security.  In other terms, owning your own single-family home has long been considered to be the American Dream.

Unfortunately, in today’s world, homeownership is no longer considered to be the “be all, end all.”  According to Apartment List’s 2021 Millennial Homeownership Report, nearly 1 in 5 Millennials have given up on homeownership altogether.  18.2% of non-home owning Millennials in 2020 indicated that they expected to always rent, up from 12.3% in 2019 and 10.7% in 2018.

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Why?  Rob Warnock, research associate with ApartmentList, said, “…affordability remains the biggest roadblock to prospective Millennial homebuyers.”  These nearly 20% of Millennials simply cannot the upfront cost of a down payment.

And if they could afford a down payment on a single-family home, how would ROI on the home compare to the ROI on Bitcoin?

Comparative Returns on Investments for Single-Family Home & Bitcoin

A recently released five-year analytic study by Point2Homes.com compared the returns on equal investments in a median-priced home in the largest 100 US cities based on 2017 prices and a 20% down payment against Bitcoin then priced at $964.

In 2017, the median-price of a home in San Francisco was $1,252,543.  A 20% down payment, or initial investment, would have been $250,509.  That initial investment of $250,509 would have bought 260 B.

Today, the median price of a single-family home in San Francisco is now up +222%, a gain of $270,280.  If you had instead bought Bitcoin with that initial investment, or down payment, of $250,509 or the equivalent in Bitcoin  of 260B, you would have realized a return on investment of $18.08M.

For a more “normal” priced single-family home in Columbus OH, the 2017 home would have required a down payment of $27,738.  That $27,738 would have bought 29B in 2017.  Today, your 29B would be worth $1.78M and your single-family home ROI would be around $76,000.

The same is true in Laredo TX…$12,000 ROI on single-family home and ROI on Bitcoin is $2M.  Norfolk VA?  $57,000 vs $2.5M.

Real Estate Never Intended to Generate Overnight Wealth

Historically, real estate has been expected to beat the rate of inflation via gradual price appreciation.  The goal, slow and steady just like the turtle wining the race against the hare, was to buy a house to escape rental price increases, hang on to the house with a cost-certain, fixed-rate mortgage, enhance the home’s value with remodels/additions/landscaping, pay off the mortgage, use the home equity/home sale to retire in a warm climate.

Cryptocurrency Still Niche Currency and a Volatile One At That

Bitcoin, Ethereum, Dogecoin, we could go on and on here because blockchain currency has been around for a long time now, are names most of us are only becoming familiar with.  Two of the things that immediately pop into our heads when we hear these names are wealth and volatility.

Yet the more “vendors” such as the second-home investment platform Pacaso and real estate single-family home sellers accept cryptocurrency as payment, the more familiar we’ll all become with blockchain-backed funds.  According to Inman, “it’s not far off from becoming ‘common’ in more and more transactions.

And it’s also not far off that some of that volatility associated with cryptocurrencies will be lessened.  Many arms of the federal government are currently looking into how cryptocurrencies are being used, how much wealth they’re generating for which people, and how to place protective restrictions on the blockchain-backed funds.

Still, for right now, research from Point2Homes indicates that cryptocurrencies are better wealth generators than real estate. Perhaps owning cryptocurrencies will be the hallmark of a revised American Dream?

Thanks to Point2Homes, ApartmentList and Inman.





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