Is Colorado’s housing market ready for crypto transactions?
Rising use of cryptocurrencies could pose challenges for homebuyers in competitive market
A view inside a penthouse on Blake Street in downtown Denver that is on the market for $12 million, with a seller who intends to complete the transaction through cryptocurrency. (Courtesy of Shelly Vincent)
The owners of a pair of homes listed for sale in Colorado are asking for cryptocurrency in exchange for the properties, which raises the question about whether Colorado’s housing market is ready to embrace such transactions.
One of the properties is a nearly 7,000-square-foot penthouse located at 2245 Blake St. in downtown Denver that is on the market for $12 million. The other property is a four-bedroom, five-bathroom home located at 12370 Tapadero Way in Castle Pines and is selling for nearly $1 million.
These properties are not the first in Colorado to ask for cryptocurrency in the sale. In 2018, a Denver-area home was listed for sale for Bitcoin holders before being sold through a more conventional method.
However, experts say crypto’s increasing popularity has many investors seeking to use the value of their crypto assets to acquire real estate, which could pose additional challenges for homebuyers in one of the nation’s most competitive housing markets.
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“Blockchain technology has the ability to really unleash the value of real estate,” Merav Ozair, a blockchain expert and assistant professor at Rutgers University’s business school, told Colorado Newsline in an interview. “It opens up a lot of activities and business models that you wouldn’t have otherwise.”
It’s no secret that cryptocurrencies and their underlying blockchain technology has revolutionized the financial world. Blockchain technology is essentially an immutable digital ledger of transactions that can’t be rewritten once it is recorded. Meanwhile, cryptocurrencies act as digital mediums of exchange for transactions recorded on their respective blockchains.
As the value cryptocurrencies has skyrocketed since Bitcoin first reached the market in 2009, investors are now looking for ways to make use of their capital gains without divesting from the technology that helped create their wealth. One popular avenue for such investors is to purchase real estate.
There is a direct correlation between the age and tech demographics and the demand to buy homes using cryptocurrency.
– Shelly Vincent, of eXp Realty
In response to this new demand, startups like Propy in Florida began offering ways for crypto enthusiasts to buy and sell real estate with cryptocurrency in the U.S. The real estate brokerage sold its first house using blockchain technology to record the title deed in February, and other agencies have quickly adopted the new trend.
“Blockchain opens up more opportunities for real estate investment for both homeowners and potential buyers,” Ozair said.
To Ozair, one of the biggest benefits of using blockchain technology in real estate transactions is that it allows for fractional ownership of a property. This means that buyers can purchase just a piece of a home — like a room — if that’s all they can afford. Ozair adds that this can also increase the demand for homes, thereby helping to push home prices higher.
Some real estate agents like Shelly Vincent, the president of blockchain properties at eXp Realty in Denver and listing agent for the properties on Blake Street and Tapadero Way, say that blockchain won’t work in every housing market.
To Vincent, housing markets that are amenable to cryptocurrency transactions share three characteristics. First, these markets have a large share of potential homebuyers that are either millennials or Gen Z. The markets are also in areas where technology is a key player in the local economy, and they have a large share of international buyers as well.
“It’s definitely a demographic-driven phenomenon that is slowly growing,” Vincent told Colorado Newsline. “But, by all means, there is a direct correlation between the age and tech demographics and the demand to buy homes using cryptocurrency.”
When viewed through this lens, Colorado’s housing market may prove to be a friendly destination for people who want to buy homes with crypto. A recent study by the National Association of Realtors found that millennials make up the largest first-time home buying coalition in every housing market.
Meanwhile, Denver recently ranked as the fifth-best city for people to get a job in the cryptocurrency industry, according to a report by LinkedIn.
Colorado leaders are also working to make the state more attractive to crypto and blockchain companies as well. The state is already home to one of the largest blockchain companies in the world — Riot Blockchain in Castle Rock — and Gov. Jared Polis has said he wants to give taxpayers the option of paying taxes in cryptocurrency as well.
But adopting crypto into Colorado’s already scorching housing market could push many homebuyers out of the market altogether. Data from Zillow shows that the typical home value in Colorado has increased by 38% up to more than $569,000 since February 2020. Nearly 24% of that increase happened over the last 12 months alone.
Vincent said that 1-in-5 Colorado millennials are already using crypto to buy homes, though they have to cash-out their holdings before making a purchase. Moving forward, Vincent adds that one of the biggest obstacles that the industry needs to hurdle is getting lenders, title companies and insurance agencies all on board with using crypto as a payment method. Right now, there are only a few firms that are willing to enter the space, which has only served to increase the closing costs.
“We are only just beginning to see what this technology can do in this industry,” Vincent said. “I think time will tell, but right now we are seeing huge positives from the adoption of crypto in Colorado’s housing market.”
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