Up against fast-growing home prices, first-time homebuyers are using high-tech solutions to clear the largest hurdle to homeownership.
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.
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%).
At 52%, money saved directly from paychecks is still the largest source of down payment funds for first-time homebuyers.
Related reading: How To Buy a House With Cryptocurrency
Redfin did not provide a generational breakdown, but 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
That share is expected to grow in coming years as more millennials reach peak homebuying age. 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.
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.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.