Why You Should Know About Real Estate Cryptocurrencies

You may have heard of cryptocurrencies like Bitcoin. But the one you really need to know about is Brickcoin.

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In case you haven’t heard already, cryptocurrencies are meeting the world of real estate investing. It's a very exciting prospect, so let me explain what’s going on.

Cryptocurrencies are very much like regular money in that you can use them to pay for many things.The best-known cryptocurrency right now is bitcoin. At the moment, you can use bitcoin to buy software on the Microsoft site, to book a plane ticket on Expedia, or even to withdraw actual dollars from a number of bitcoin ATMs around the country.

The value of bitcoin has been growing explosively over the past 12 months, and it recently crossed a symbolic threshold: One bitcoin is now worth more than an ounce of gold. At the same time, cryptocurrencies and regular money are very different. Cryptocurrencies are not issued by the government and are not backed by any real asset. 

This has many people worried that bitcoin and the like are open to price bubbles. Well, several startups, such as Brickcoin and REcoin, are trying to tackle this exact problem by making bitcoin-like currencies, which are backed by a very real asset: property. 

Here's how it works. First, these startups make an initial coin offering. This is similar to the way traditional companies offer stock. It's a way of raising money while putting a certain amount of the cryptocurrency into circulation. 

One bitcoin is now worth more than one ounce of gold.

Second, the startup invests this money in a real estate investment trust (REIT). The value of the currency is then a reflection of the actual value of the underlying real estate investments. In theory, this means you get the best of both worlds: the flexibility and liquidity of cryptocurrencies like bitcoin, as well as the steady returns, the security, and regulatory oversight of a real asset such as property. 

In practice, it's still way too early to say whether this idea will work, and if it does, which of the real estate cryptocurrencies will emerge as the winner. In any case, this is certainly an interesting development that's worth keeping an eye on.

However, there will always be room for traditional real estate investing. People love investing in real estate because property is a tangible asset less prone to volatility and market manipulation. Also, real estate allows for greater leverage than just about any other type of investment. 

If you have any other questions for me about cryptocurrencies or any other topic related to the real estate market here in the DC Metro, give me a call at now 703-328-3434 or send me an email at Janet@TheGreshGroup.com. I look forward to hearing from you soon.

Happy Holidays From Our Family to Yours!

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From my family to yours, Happy Holidays! Thank you for your support this past year. To hear the full holiday message from Emma and Adam, watch this short video!

A Warm Holiday Greeting and Happy New Year from Janet Gresh with The Gresh Group

It’s hardly believable that we are at the cusp of yet another year – and it’s almost 2014! With a fantastic year behind us, we look ahead toward a great future in the coming months. I can’t tell you how much of a pleasure it has been serving our community members with the expert advice, one-on-one care and guidance with real estate endeavors in our communities.

Here’s a warm, resounding “Thank you!” to all our current and past clients. We believe you are more than just clients; you’re our friends and neighbors. We cherish that special relationship we have with each and every one of you.

Whether you have engaged in the purchase of a new home, sold a property or just needed advice and counsel on your real estate transactions – we have enjoyed being a part of the journey with you.

Once again, thank you for trusting us with one of the most important aspects of your life and we wish you a warm, wonderful holiday season – with many happy times to come in the New Year and beyond!

Government Shutdown Risks Hurting The Housing Recovery

From: http://www.forbes.com/sites/morganbrennan/2013/10/01/heres-how-the-government-shutdown-will-affect-housing/

By:  Morgan Brennan, Forbes Staff

The government shutdown is here. Whether it’s not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there’s one bright spot of the economy that stands to be affected as well: housing.

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers’ access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.

Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.

Mortgages purchased and securitized by Fannie Mae and Freddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.

But if the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. “Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed,” the VA warned in its September 25th contingency plan.

Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.

That prospect would be somewhat worrisome – if it were actually true. The FHA’s Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans,” the report now states. In other words, other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.

The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development’s contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.

The FHA’s single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government’s standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency’s Multifamily Housing Office, which is funded through yearly appropriations.

“Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief,” continues the HUD report. “If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.”

One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause “a setback in construction start-up,” and if the shutdown lasts for an extended period, “a substantial reduction in housing available in rural areas relative to population.”

“The government doesn’t generally approve loans, they basically just insure them,” says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. “For the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time.”

If it does stretch on, he adds, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes.

Home lending aside, many economists and real estate experts are keeping a close watch on how Americans will react to this shutdown. “Administratively everything should keep moving along, but it’s more about the confidence of consumers and whether they perceive that the government shutdown could lead to a recession,” says Lawrence Yun, chief economist at the National Association of Realtors.

Moody’s Analytics chief economist Mark Zandi recently told the Senate Budget Committee that a partial shutdown could shave as much as 1.4 percentage points off of fourth quarter economic growth if it drags on for several weeks.

Americans’ confidence in their ability to buy and sell homes hit a record high in May, according to a Fannie Mae survey. Since then, as mortgage rates jumped more than a percentage point, that confidence level has plateaued.  If prospective homebuyers fear that the country’s economic recovery will stall, or worse slip back into recession, they will pull back on purchases, worries Yun.

“Home sales is always the first housing variable that changes so one would see sales declining and that would naturally lead to more inventory on the market and eventually put pressure on prices,” he says. But that would be a worst-case scenario based on a long-term shutdown.

Jed Kolko, chief economist at Trulia TRLA +6.43%, notes that if the shutdown lasts longer than a few days, the first places to feel the impact will be local economies with large concentrations of federal government workers. Metro areas like Washington, D.C. and Bethesda, Md., where 19% and 13% respectively of total local wages go to federal employees, would be the feel the negative effects of unpaid furloughs and with them, tightened consumer spending and weakening local economic growth. Though not all will be equally affected, other metro areas like Virginia Beach, Va., Honolulu, Hawaii, and Dayton, Ohio are areas that Kolko is keeping an eye on: “Whether there is a big effect depends on how long the shutdown lasts, how long people think the shutdown lasts, and whether people get back-pay. All those things matter for the impact.”

Still others are worrying even more about the next fiscal standoff, in  mid-October, surrounding the debt ceiling debate and its accompanying threat of debt default by the U.S.  ”With the threat of an impending partial government shutdown and yet another battle over the nation’s debt ceiling, in particular, we are really messing with fire right now—even if it doesn’t seem to bother some legislators,” says Stan Humphries, chief economist at Zillow.

“But the effects of a government default associated with the impending debt-ceiling deadline would be more pronounced because of its greater impact on domestic and international markets. This will rattle consumers and investors alike, slow down the overall economic recovery and further slow the housing recovery, which is already undergoing a moderation in the pace of home value gains due to rising mortgage rates,” he warns.