Digital currencies are becoming an increasingly common payment method, as millennials are taking over the housing market.
According to a new report from Redfin [1], one in nine first-time home buyers, or an average 11.6%, surveyed in Q4, reported selling cryptocurrency had helped them save for a down payment. This is up from 8.8% in the Q2 of 2020 and 4.6% in the Q3 of 2019.
“With extra time and a lack of exciting ways to spend money, many people began trading cryptocurrencies during the pandemic,” said Redfin Chief Economist Daryl Fairweather [2]. “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.”
The report is based on a Redfin-commissioned survey of 1,500 U.S. residents planning to buy or sell a home within the next year.
The report focuses on the 215 of those 1,500 respondents who answered the question “How did you accumulate the money you need for a down payment?” which Redfin only posed to participants who indicated they were planning to buy their first home. Some 52% said funds were “saved directly from paychecks”, while less common responses included 12% reporting a “cash gift from family” and another 10% “pulled money out of a retirement fund early."
“Crypto is one way for people without generational wealth to win a lottery ticket to the middle class,” Fairweather said.
Bitcoin is the world’s largest digital currency, which hit a record high of nearly $69,000 in November.
Ether, the second most valuable cryptocurrency, also reached an all-time high, though both coins have since lost some of those gains. With surging home prices leading to larger down payments, some buyers are finding non-traditional ways to cover the cost and compete with other bidders.
Digital currencies are also likely on the rise as a payment method among homebuyers because millennials and Generation Z are taking up an increasing share of the U.S. housing market. Millennials, who own more cryptocurrency than other generations, now account for more than half of new mortgages.
Click here [1] for more on Redfin's report on cryptocurrency.