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Crypto mortgages are on the rise

Crypto mortgages are on the rise
by Brad Cartier, posted in Newsletter

Despite the volatility of cryptocurrencies, they continue to be a growing trend in the real estate world. Tony Cantu of Mortgage Professional America (MPA) reports on Altisource Portfolio Solutions SA’s recent agreement with ForumPay, a cryptocurrency payment service, to allow for the purchasing of homes with crypto.

“To that end, holders of cryptocurrency can buy any property on or off the MLS, or by selecting PremiumTitle as their title and escrow company and sending their Bitcoin, Litecoin, Dash, Ethereum or Bitcoin Cash to a ForumPay wallet for conversion.”

There’s no doubt that the usage of cryptocurrencies is rising. In fact, a recent Redfin report shows that 12% of first-time homebuyers used crypto to help save for their down payment. This is up from 5% in 2019.

Crypto and first time buyers - Redfin

Source: Redfin (Jan. 2022)

Maxwell Strachan of Vice reports on Milo, which claims to be offering the first-ever crypto mortgage. In short, Milo will allow homebuyers to use their crypto savings as leverage in order to purchase a home with no money down and no need to convert their Bitcoin to US dollars.

Mortgages are also moving into the Metaverse through non-fungible tokens (NFTs). According to GoBankingRates, “[M]etaverse tech company TerraZero announced the completion of one of the first-ever “metaverse mortgages” with platform Decentraland, in an effort to enable more people to acquire virtual real estate.”

Housing bubble watch

Last week, Realtor Magazine reported on a survey that found that 77% of consumers believe that we are currently in a housing bubble. “On the other hand, less than half—44%—of real estate agents say they believe there’s a housing bubble in their market, with the rest feeling far more confident about the state of the market.”

That said, many experts disagree with the bubble thesis as well, starting with Paul Krugman of the New York Times who noted eloquently last week:

“[T]he case for a bubble isn’t nearly as compelling as it was in 2005 or 2006. That doesn’t mean that all is well. Real estate people I know tell me that there’s still a feeling of unhealthy frenzy, and people who paid high prices for small-town houses may regret it once supply chains get unsnarled and more houses get built…But this time is different, even if some house prices are starting to look like the 2000s bubble. I wouldn’t say that everything is fine, but a housing bubble probably isn’t in my top 10 list of things to worry about.”

Daniel Kline of TheStreet jumps in to report that “The reality is that unless something changes in the economy that leads to increased defaults (or lenders get lax on their standards as they did in 2008), the market will remain strong for inventory-related reasons.”

Similarly, The Title Report quotes chief economist of Redfin Daryl Fairweather as addressing bubble concerns: “The housing market is much stronger than it was before and during the Great Recession…There’s a very low likelihood that home prices will go down anytime soon.”

Finally, Mark Zandi of The Washington Post believes we still aren’t in a bubble, with a small caveat: “No. Not yet. But I say this with less confidence than I did a year ago, and if current trends continue for another year, I won’t be saying it at all.”

Top this off with an excellent Bloomberg article by Ramesh Ponnuru titled, There Was No Housing Bubble in 2008 and There Isn’t One Now, showing how economists are challenging “the conventional wisdom that the Great Recession was triggered by out-of-control home prices.”

#LocalNews: Austin

Austin has been one of the hottest markets of 2021, and looks poised to continue its growth into this year. Claire Partain of Austonia reports that projected robust job growth in 2022 will see another strong year for housing with supply struggling to keep up. Pertain continues with Austin Board of Realtors data showing that the housing market accounted for $23 billion of economic activity last year (a record). Median prices jumped 30% from 2020 to $450,000.

Austin housing market dec 2021 - Board

Source: Austonia (Jan. 2022)

Similar Redfin data shows that the increase in Austin home prices for 2021 doubled the national average, ending the year at nearly 40% year-over-year growth. This is a total value gain of $103 billion, roughly the same as Ecuador’s GDP.

“The total value of homes in Austin surged 39.2% year over year to $365.9 billion in December—the largest gain among the 100 most populous U.S. metropolitan areas. The $103 billion increase in the Texas capitol is roughly equal to the 2020 GDP of Ecuador. Next came Cape Coral, FL (36.9%), Grand Rapids, MI (33.1%), Phoenix (32.8%) and Boise, ID (32.8%).”

CrowdStreet released their 2022 best places to invest, with Austin at the top of the list:

“Earning the nickname “Silicon Hills,” a reference to the growth of its tech sector and proximity to the Texas Hill Country, Austin is our top market for 2022. Austin continues to benefit from several years of strong population and job growth, thanks in part to corporate relocation and expansion by some of the nation’s largest companies, including Tesla, Oracle, and Google. With over 25 colleges and universities*, a high concentration of STEM majors, and relative affordability compared to other tech hubs, Austin has a strong long-term outlook.”

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