Crypto Property Sales Are Officially Here, But Will They Last?
With the arrival of Bitcoin in 2009 and subsequent blockchain currencies, conversations about crypto-property followed immediately, albeit in hushed murmurs.
Fast forward to today, and stories of seven-figure crypto-property transactions abound in the industry. As with any budding technology—especially a promising revolutionary change—there are believers and skeptics.
Cryptocurrency is available at the touch of a screen.
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What is not debatable, however, is whether or not someone with a vested interest in the property market should be keeping a close eye on what is happening with crypto-property. As the Scottish writer George MacDonald once said, “The best preparation for the future is the present well seen.”
While crypto real estate sales are on the rise in Manhattan and Miami, other global and luxury markets are testing the waters. In the Bahamas, what was once just crypto-curiosity is now quietly changing the landscape of how real estate purchases are completed, says MAISON Bahamas Founder and CEO Ryan Knowles. “When deals started popping up in places like Florida and New York, a lot of interest started building here. Now you have a couple of different companies facilitating crypto transactions in our market, and some developers are accepting crypto for the purchase of housing.”
Agents share that an adaptation to new financial frameworks has created a new buyer pool, … [+]
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Although there are several obstacles to overcome, Knowles believes that real estate transactions will become easier than ever when digital currency becomes an established means of payment. “It used to be that people just took cash, then it changed to credit cards and then to Apple Pay, and all these different payment developments made it easier to transact. Now with crypto, it can [potentially] get to the point where you can buy a house with the click of a button like ordering a coffee.”
Meanwhile, Knowles says the immediate impact of crypto on the market can be seen throughout the new pool of buyers that has been introduced to the Bahamian market thanks to the adjustment of economic frameworks. “These buyers who have accumulated their wealth through cryptocurrency are not only entering the market, but becoming major players, and there has been incredible growth,” observes the luxury home specialist.
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A row of multi-million dollar homes line the beach near the exclusive Ocean Club golf course. … [+]
In Los Angeles, Paul Salazar of Beverly Hills-based Hilton & Hyland sees a similar wave of new money entering the market. “Crypto made a lot of people rich and this has added a whole extra layer of wealthy buyers who want to cash out their earnings and buy a mansion.”
Like the Bahamas, Los Angeles is in the preliminary stages of structuring for crypto real estate, but no real estate has yet been fully traded in digital currency. Salazar believes this hesitancy to accept crypto as a form of payment largely stems from sellers’ fear of the currency’s volatility. While the benefits – speed, ease and security – may result in an increasing number of sales completed with digital currency in the future, the reluctance will continue until crypto stabilizes.
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Homes like this restored Midcentury Modern in Beverly Hills may not be traded … [+]
As a top producer in Los Angeles’ ultra-luxury market, Salazar has seen firsthand how recent falls in cryptocurrency values have affected sales. “Over the last few months we’ve seen crypto drop significantly and that has resulted in a lot of escrow cancellations. If you’re looking to buy a home and your crypto drops 20% in value the day before closing, you’re going to lose the house , and sellers in this market know that. At the end of the day, people still want cash.”
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Entrepreneur, investor and author Mike Shapiro believes there is great value in taking real estate digitally, but considers the lack of stability in crypto investments too big a risk to ignore. “Blockchain technology may very well be the future of real estate, for obvious reasons — it’s efficient. But there won’t be any value in these cryptocurrencies, like Bitcoin, until they’re backed by something,” Shapiro says. “Until then, there’s no value in property. There is no stability in it.”
Shapiro, who previously grew the HOM Sotheby’s brand from $200 million to about $2.1 billion in … [+]
Although crypto volatility has sent ripples across the investment landscape, the swings are not expected to affect real estate, where a lack of housing inventory continues to drive the seller’s market. If anything, Shapiro believes that investing in real estate over the long term, especially in high-demand markets, will continue to be a stable investment.
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“Property works very much like stocks; it acts as a warehouse. If you’re invested in good teams, good branding or, in the case of real estate, a good product, there’s money in the bank. Areas like Beverly Hills or East Manhattan or Aspen are like Apple stocks; they’re not going to hurt as much in down times.”
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EQTY, Hilton & Hyland and MAISON The Bahamas are exclusive members of Forbes Global Propertiesa consumer marketplace and member network of elite brokerages selling the world’s most luxurious homes.
