Bitcoin, the first digital currency that works without a bank or middleman, surged 183.6 percent in the last month, from $5,870.37 per coin on Nov. 12 to $16,650.01 on Dec. 12, according to Bitstamp data. Its market cap is more than $293 billion, and while some analysts warn of a crypto bubble, others say Bitcoin could eventually compete against the gold market. Regardless, cryptocurrency has created fast wealth for investors, and now some are cashing out and going house hunting.
Real estate agents in Boston, Chicago, Houston, Philadelphia, Washington D.C. and several cities in California said they’ve had conversations with people about using cryptocurrency as part of their transaction.
Carina Isentaeva, a Redfin agent in San Francisco, recently helped a client write an offer on a luxury home in Silicon Valley that was contingent on the sale of cryptocurrency. The offer was accepted, but the buyer ended up backing out when his cryptocurrency didn’t sell. Isentaeva said she’s confident he will buy when it does.
Jeremy Paul, a Redfin agent in San Diego, also worked with clients who held Bitcoin. He said his clients cashed out two bitcoins, valued at $7,435 each, to cover the closing costs on a home in Carlsbad, CA.
And homebuyers aren’t the only ones in the cryptocurrency game. Redfin found 75 listings nationwide in which the seller mentioned he or she will accept Bitcoin as payment. The seller of a condo in Miami is requesting payment in Bitcoin only; it will cost the buyer 33.
One way to illustrate the unprecedented growth of Bitcoin is to look at the price of the typical home in bitcoins over the past year. For example, in January 2016 in San Francisco, the typical home would have cost a buyer 2,805 bitcoins. Today, the median home in San Francisco is 82 bitcoins.
For buyers who have made a lot of money on the recent surge in cryptocurrency value, buying a home is a reasonable way to use the proceeds. For sellers accepting Bitcoin, however, it’s riskier because accepting cryptocurrency as payment is a bet that it’s going to continue to increase.
“It’s hard to say whether the use of cryptocurrency to buy and sell homes is a long-term trend or just a blip based on the recent spike in value,” said Redfin chief economist Nela Richardson. “In some ways, cryptocurrency investors have just won the lottery, and so it makes perfect sense to buy their dream home. On the other side of the ‘coin’, sellers probably wouldn’t accept lottery tickets as payment.”
Currently, Redfin does not accept cryptocurrency as a form of payment.
Methodology
For this analysis we pulled the monthly median sale price for each metropolitan division with a population of 750,000 or higher. Then we pulled the daily weighted BTC to USD exchange rate from Bitstamp (via Quandl) and used the value for the end of every month. Then we divided the typical home price by the corresponding exchange rate to convert home prices in dollars to bitcoins.
