High profile sales may indicate rising interest in investing cryptocurrency in real estate.
Cryptocurrency is in its infancy, but it has already proved its staying power. Within ten years, bitcoin has evolved from obscurity into a household name and gained traction as an acceptable form of currency in several industries. Lately, trends indicate a rise in its popularity in real estate.
In the last six months, an increasing number of real estate listings have added cryptocurrency as an acceptable form of payment, and some even list it as the only accepted payment method. Though crypto-to-crypto transactions are relatively new and still infrequent, they took place in real estate as early as 2014.
South Florida was significantly impacted by the cryptocurrency boom and Miami’s real estate market is beginning to reflect that. Crypto is mentioned in fewer than 1 percent of real estate listings, but the city has seen several high-profile transactions involving properties listed for cryptocurrency.
Luxury realtor Laura Keller of Pulse International Realty believes that cryptocurrency will only become more popular as the technology becomes more accessible.
Bitcoin investor Michael Komaransky sold his Miami mansion in late 2017 in the largest real estate transaction to occur using crypto. The property sold for the bitcoin equivalent of $6.4 million.
Keller represented the buyer and though he wished to remain anonymous, she said he was an early investor in the market.
“The buyer invested early in cryptocurrency, and once he saw two hundred times his investment in returns, it was time to diversify some of the profits in other, more traditional assets. He was able to sell the Monero into Bitcoin to make the exchange. This is the largest cryptocurrency real estate purchase of all time in the United States and possibly the world,” Keller said.
Since Keller’s sale, at least four listings in the luxury real estate market gave cryptocurrency as an acceptable form of payment. She believes this number will only continue to increase as blockchain technology continues to permeate the market.
Keller said that part of the problem now is that paying off a loan in cryptocurrency is doable but complicated. Transactions go more smoothly if the seller doesn’t owe money on the properties being sold and is comfortable being paid in cryptocurrency.
“Wide adoption of cryptocurrency in real estate purchases is five to ten years away from being mainstream right now. There is a lack of sellers who own their properties outright, but as our culture begins to accept this new reality that crypto is here to stay, new services will be put in place between banks and sellers to help with these issues,” Keller said.
Part of the appeal of using cryptocurrency in the real estate market is the potential to accommodate new demographics. Crytpo transactions open up the real estate market to foreign investors who are unable to invest in the United States because of capital control restrictions in other countries.
Demographic shifts also indicate that people in the 20-40 age range are a big buying market right now. Their buying power is also influencing other industries, and many businesses are changing to accommodate the rise in new forms of payment, including—but not limited to—cryptocurrency.
Another draw of using cryptocurrency for transactions is that they are regarded as more secure than cash transactions. This is because the blockchain reflects every transaction that occurs, allowing for better accountability.
In terms of the real estate market, 2018 might offer new investment prospects. After the Great Recession, housing demand and family growth outpaced construction of new developments. However, developments are finally catching up with the market. For early crypto investors looking to invest payoffs elsewhere, the luxury real estate market may have some attractive offerings, if the trends in Miami sales are any indication.
Until legal systems catch up with technology, most of the work in implementing blockchain in real estate falls on realtors, buyers, and sellers. However, for those willing to do the work, cryptocurrency transactions offer a way to attract a new market and make investments that could have lucrative payoffs as blockchain technology and the crypto industry grow.