1 in 9 First-Time Buyers Are Using Crypto Earnings to Save for Down Payment
As a way to combat home prices going up, many first-time homebuyers are using crypto to help them buy a home. Crypto is a high tech solution that really has just come about in the last 10 years.
According to Sam Wigness, a writer for Home.com, “In the fourth quarter of 2021, 11.6% of first-time homebuyers said they sold investments in cryptocurrency to accumulate money for a down payment. That’s up from 4.6% in 2019 and 8.8% in 2020, according to an annual survey sponsored by real estate brokerage Redfin and conducted by research company Lucid.”
That translates to in 2021, putting crypto earnings toward a down payment on a house became more common than pulling money out of a retirement account (10%) and nearly as common as receiving a cash gift from family (12%). 52% of home buyers used money saved directly from paychecks is still the largest source of down payment funds for first-time homebuyers.
“In our branches, we are definitely following crypto currency trends on both a personal and professional level” said Ethan Wilson, co-founder of team VA the Fairway and Branch Manager for Fairway Independent Mortgage Corporation. “We’re really excited to see how this trend develops moving forward.”
Redfin did not provide a generational breakdown, but according to Wigness, “all signs point to millennials as the drivers of this new homebuying trend”
In 2021, millennials (born 1981-1996) made up:
- 67% of first-time home purchase applications
- 37% of repeat home purchase applications
- and 51% of all home purchase applications
“According to this chart, the share is expected to grow in coming years as more millennials reach peak home-buying age. I really hope and expect that this positive trend continues upwards.” said Wilson.
The largest cohort of millennials turned 30 in 2021 and the median age of first-time homebuyers is 33.
Millennials have also become the largest adopters of cryptocurrency. In a survey from Pipslay, 49% of millennials said they own cryptocurrency followed by 38% of Gen X and 13% of Gen Z. “These numbers sound about right” said Wilson, “generally about half of my clients, or slightly less are interested in the crypto markets.”
Redfin Chief Economist Daryl Fairweather pointed to the pandemic as another driving factor in cryptocurrency’s growing role in the housing market. “With extra time and a lack of exciting ways to spend money, many people began trading cryptocurrencies during the pandemic,” Fairweather said. “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.”
Without cash from a previous home sale, first-time homebuyers have been at a disadvantage during the ultra-competitive pandemic housing market. “But crypto earnings may help some homebuyers bring more cash to a sale and make their offers more competitive. With more millennials expected to enter a hot market in 2022, crypto is likely to further increase its share as a source of down payment funds.” remarked Wigness.
Buying a home with cryptocurrency or using crypto to make a downpayment is not out of reach, Ethan Wilson says that “If you want to know more about how to do this, the right way, just contact us. We have licensed loan officers that will gladly walk you though the documentation, etc. that you will need to use your crypto.”
If you don’t know anything about Crypto currency or markets, but want to learn, contact a licensed Financial Advisor, to walk you through where to start. In addition, consider doing your own research and learning about Crypto through reading resources online, googling, reading books, watching documentaries, listening to podcasts or even listening to daily “Crypto Talk” rooms on Clubhouse, the popular social audio app.