Almost 12% of first-time buyers indicated their cryptocurrency helped them purchase their homes
New Survey Points to Crypto Investments as Helping to Cover Down Payments
Nearly 12%, 11.6% to be exact, of first-time homebuyers sold all or a portion of their cryptocurrency to help pay for their down payments in Q4 2021, according by a freshly published survey by Redfin.
This 11.6% of first-time buyers tapping into their crypto investments in Q4 2021 for home purchases via down payments is up from 8.8% in Q3 2020 and 4.6% in Q3 2019.
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Redfin chief economist Daryl Fairweather said, With extra time and a lack of exciting ways to spend money, many people began trading cryptocurrencies during the pandemic. Some of those investments went up in smoke, but others went ‘to the moon,’ or at least rose enough to help fund a down payment on a home.”
Fairweather added, “Crypto is one way for people without generational wealth to win a lottery ticket to the middle class.”
Digital Currencies on Rise as Payment Method among Homebuyers
Millennials now account for over 50% of home-purchase applications with Gen-Zers on their tail. These home buyers, likely first-time buyers, are usually more likely than older investors to be buyers and sellers of cryptocurrencies.
Just as Redfin’s Fairweather said, “Crypto is one way for people without generational wealth to win a lottery ticket to the middle class,” a first-time homebuyer told MarketWatch that investing in cryptocurrencies made his home buying dreams a reality. This Millennial software engineer said, “Without investing in crypto there would have been no way that I would have been able to buy (the home I wanted) at the time when it came on the market.”
Converting Crypto into Down Payment Bit of a Challenge
This first-time buyer couldn’t just transfer over his crypto investments or show his account balance on Coinbase to show his lender and title company that he actually had the funds necessary for a down payment. He had to cash out his crypto investment into a bank account, just like an investor in the stock market would have to do with his stock earnings.
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Why was the crypto cash-out necessary? Because lenders usually ask borrowers for a paper trail showing a 30- to 60-day transaction history for the crypto account. The hitch? Some crypto accounts don’t provide monthly statements like banks do. The result? Chris Birk, director of education with Veterans United told Market Watch. “It’s (cryptos) going to have to be converted, it’s going to have to be seasoned, and there’s going to be documentation to satisfy the lender.”
Thanks to MansionGlobal, MarketWatch and Redfin.