How Do Crypto Profits Impact The Housing Market? An Informal Report
25 Novembre 2021 - 5:14PM
NEWSBTC
Is the housing market in a bubble? Is the cryptocurrency party
about to blow up? This informal study is fascinating because it
doesn’t come from the crypto world. The author, Rick Palacios Jr.,
is Director of Research at John Burns Real Estate Consulting. The
results are surprising, to say the least. Especially considering
how early we are. Whatever camp you’re in, one thing’s for sure,
cryptocurrencies will be a big factor for the rest of the decade.
Maybe for the whole century, even. Related Reading | Virtual Real
Estate Takes Off With Backing From Billionaire Mike Novogratz
Palacios Jr. begins by painting the current situation’s general
picture: “Low interest rates and a world awash in liquidity
set the stage for financial markets and asset-value froth as an
adult today. As market participants, we watch with a healthy dose
of nervousness, wondering just how long we’ve got until the
inevitable bubble-bursting cleanup ensues.” Even though the housing
market is on the rise, “this period of ephemeral effervescence
isn’t sustainable.” He doesn’t get into the rampant money printing
that his country is living with, but we will. Inflation is one of
the effects of all of these inorganic dollars entering the market.
Another effect is that people feel, maybe subconsciously, that
their money is losing purchasing power and turn to hard assets.
Before Bitcoin, real state was the hardest asset there was. It’s
only logical for the newly printed money to make its way to the
housing market, raising prices. An Informal Survey Shows Surprising
Results “Trying to gauge crypto & NFT boom impact on housing
market.” To test his hypothesis, the researcher turned to Twitter.
His question was, “Have you or someone you know used profits from
crypto and/or NFTs to help with the down payment of a home
purchase?” In 72 hours, Palacios Jr. received 385 votes.
Trying to gauge crypto & NFT boom impact on housing market.
Have you or someone you know used profits from crypto &/or NFTs
to help with down payment on home purchase? — Rick Palacios Jr.
(@RickPalaciosJr) September 4, 2021 “To my amazement, 20% of
respondents indicated yes, they had indeed used profits from crypto
and/or NFTs to help with the down payment on a home purchase.
Heading into the survey, my ballpark estimate would have been below
5%, probably closer to 1% or 2% if you’d asked me to place a bet.
Yes, the Twittersphere likely understands and uses crypto/NFTs more
than the general adult population, but still, 20%!” If NewsBTC ran
this poll through our Twitter account, numbers this high would be
somewhat surprising. However, Palacios Jr.’s audience is not a
crypto audience. His tweets are usually about the housing market.
So, these numbers are outstanding. What’s happening here? BTC price
chart for 11/25/2021 on Coinbase | Source: BTC/USD on
TradingView.com Conclusions About The Housing Market After the
survey, Palacios Jr. turned to his contacts in the real state
business. He found out that “the percentage of home buyers
voluntarily documenting crypto accounts during mortgage
underwriting has gone from almost 0% one year ago to between 5% and
10% today.” In the case of down payments, though, “most lenders and
builders I spoke with estimating the percentage at roughly 5% or
less. On occasion, 10% to 15% was noted, namely in higher price
points and/or communities skewing toward younger buyers more
familiar with crypto.” Over the last few months I’ve spoken with
dozens of real estate & mortgage industry executives, trying to
gauge what impact (if any) #crypto is having on the #housing
market. Here’s what I’ve concluded. (1/) https://t.co/cNdaPrMSdY —
Rick Palacios Jr. (@RickPalaciosJr) November 16, 2021 So, the
phenomenon is real. Also, take into account that “most home buyers
don’t disclose crypto accounts, as it is voluntary and not
required.” Also, there’s still some stigma attached to
cryptocurrencies. To qualify for loans and to get cleared by real
state agencies, “Most home buyers are liquidating crypto gains well
ahead of purchasing a home for the funds to appear “seasoned”
during underwriting (typically sitting two to three months in a
traditional checking or savings account).” Related Reading | The
Game Changer: Real Estate Investment for Everyone So, are crypto
and the housing market in a bubble? They may very well be, but we
can’t be sure. This informal study’s conclusion is that the
cryptocurrency market is probably feeding the housing market’s
growth. To what degree? That’s the million-dollar question.
Featured Image by June on Unsplash - Charts by TradingView
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