A couple weeks ago we highlighted how one can buy when one needs to first sell. This week we get into the details and tell how we were able to sell a couple of our client’s properties and purchase their dream Monte Sereno home.
Bitcoin's value has multiplied nearly 20x this year. At the time of this writing, bitcoin is trading just above $19,000 USD per coin. As the year ends the average house in Silicon Valley is just under $1.2m, or roughly 63 bitcoins.
Being Silicon Valley, many of our clients have either heard of bitcoin over a decade ago and/or have even participated in 'mining'. Many have accrued bitcoin and often forgot about them as the actual value was below $0.01 for a very long time. We're not going to get into the origins of bitcoin, or what exactly bitcoin is, however for this article we'll be treating it as a variable asset no different than a public stock traded on a global exchange, and finally we will not be discussing the ramifications of bitcoin or other cryptocurrency and real estate. Those are topics for future articles and workshops.
So you have enough bitcoins in your wallet and would like to purchase a house? At the very foundation of such a transaction, a house is a tangible asset of which its owner can exchange for anything they deem of value and worthy of exchange. Typically, this is a cash value, but being in Silicon Valley we have seen enough homes sold for pre-IPO stock, usually for a young and promising 'disruptive' company. Most recently we witnessed a Santa Cruz beach house sold for an undisclosed amount of pre-IPO Facebook stock in early 2012.
Considering that the entire cryptocurrency market is experiencing a bull market at the moment finding a home owner willing to exchange their property for your bitcoin may highly likely, however should you? Lately the value of a single bitcoin has been anything but stable, and when managing real estate transactions the very last thing we want our clients, buyers or sellers, to experience, is remorse.
Our recommendation would be to first consult with your CPA, because when you convert your bitcoin for cash the IRS considers this a taxable action. Like selling stocks or shares in a publicly traded company, any gains on your bitcoin falls under capital gains. Thus when purchasing a theoretical $1.2m Silicon Valley home and assuming you've held your bitcoin longer than 2 years that 63 bitcoins looks more like 75 bitcoins once capital gains and closing costs are factored in.
In short, if history serves, exchanging actual bitcoin for property is a terrible financial idea. In 2010, a man in Florida exchanged 10,000 bitcoin for 2 Papa John's pizzas. 10,000 bitcoin today is worth nearly $200m. In 2013 a man paid 91.5 bitcoin for a Tesla Model S, that 91.5 bitcoin is worth nearly $2m today (a used 2013 Model S is only worth $40-45k today). Earlier this year a man purchased a Lamborghini Gallardo for 45.6 bitcoin. Bitcoin has skyrocketed since and those 45.6 bitcoins are worth nearly $900,000 today. You get the idea. Convert to cash, plan to pay capital gains, and we'll get you that house!
We had another seller's market this summer and see the market adjusting. Most of our buyers this year were all financed through traditional lending with 21-30 day closes, and even winning against all cash, non-contingent offers. Discover and learn what it takes to not just purchase a property in Silicon Valley at this workshop but work directly with our team of experts to properly prepare mentally and financially for your first home purchase!
METIS Buyers Team
Sarah Lockrem • Eric Baird • Sylvie Roy • Wallace Chane
Fred Mayer • Annie Cheng • Dennis Loewen
New American Funding
Essence Wealth & Insurance
Space is limited. RSVP Today!
We crunched the numbers this week, and bring you the heat map for first quarter Condo & Co-Op sales volume in Los Angeles. The market enjoyed some sizable improvements this past quarter – with 26 areas of growth, 14 areas of decline, and 11 areas with insufficient data. The top five hottest areas this quarter are:
Silver Lake – Echo Park (17 more listings sold, 278% increase) – The home of the world-famous man-made lake, Silver Lake – Echo Park was the shining star of the first quarter, more than tripling the amount of listings sold (8 in Q1-2016 to 25 in Q1-2017).
- Metropolitan South (2 more listings sold, 260% increase) – The southern neighbor of DTLA caught a break this past quarter, but keep in mind that it went from 1 listing sold in Q-2016 to 3 listings sold in Q1-2017.
- Park Hills Heights (17 more listings sold, 203% increase) – Park Hills Heights made a drastic quantitative growth, climbing to 29 listings sold in Q1-2017 versus 12 listings sold in Q1-2016.
- Ladera Heights (1 more listing sold, 128% increase) – Ladera Heights broke into the top 5 as well, but is another area with very few listings sold, growing from 1 listing sold in Q1-2016 to 2 listings sold in Q1-2017.
- Sunset Strip – Hollywood Hills West (3 more listings sold, 113% increase) – The tourist hotspot has persisted in selling a decent number of condos & co-ops, growing from 28 listings sold in Q1-2016 to 31 listings sold in Q2-2017.
Contact our Luis Rhee, VP of METIS Los Angeles for additional details.
If you've been home hunting then you know that the market has not missed a beat, in fact as we head into Silicon Valley's selling season the market is showing no signs of slowing down.
In March the Federal Reserve increased it's benchmark interest rate a quarter of a percent amid rising confidence that the economy is poised for more robust growth and solid employment numbers. In the span of 12 months the rate has gone up 90 basis points taking a typical 30-yr fix from 3.25% to 4.15% which roughly translates to an additional $400/mo on the same borrowed amount.
Silicon Valley and San Francisco still continue to show record low inventory. With thousands of eager and active buyers on the market, we are able to continually set record sale prices for our sellers. Nearly every one of our listing in Q1 has sold within 72 hours of the open home weekend, and many are sold within hours of listing. Proper staging, professional photography and direct target marketing continues to be the most effective methods of ensuring a connection between the home and the buyer.
Moving into Q2, this means that we will be working extra hard to ensure that our listings remain a cut above. We will also start to prospect for off-market opportunities for our buyers. Unlike most brokers that sell 2-3 properties a year, we move millions of dollars of properties every month. This compounded knowledge and experience allows us to be at the very cutting edge of our expertise.
Leverage our experience to sell your property for top dollar, in the shortest amount of time, or to successfully purchase in this ultra competitive market.
Get started by contacting us at firstname.lastname@example.org or 408.859.6528