Low-income households in the United States are leveraging their crypto profits to pursue homeownership opportunities, as per a recent report from the Office of Financial Research (OFR), a research arm of the US Treasury Department.
The study, conducted by Samuel Hughes, Francisco Ilabaca, Jacob Lockwood, and Kevin Zhao using tax data, provides valuable insights into how crypto investments are influencing financial behaviors in economically disadvantaged communities.
The report highlights the emergence of “high-crypto” areas, where over 6% of households have reported holdings in cryptocurrencies on their tax filings. These regions have witnessed a notable increase in mortgage and auto loan activities, coinciding with significant gains in the crypto market.
In these high-crypto areas, low-income households have experienced a remarkable surge in mortgage activity between 2020 and 2024. The number of consumers with mortgages has more than doubled, with average mortgage balances skyrocketing from $172,000 in 2020 to $443,000 in 2024, marking an increase of over 150%. This data suggests that crypto windfalls have enabled many families to access larger loans and enter the housing market.
The report also delves into the trends related to auto loans in these areas. Among low-income households, auto loan balances have seen a significant increase in high-crypto regions. Interestingly, while delinquency rates have risen in low- and mid-crypto zip codes, they have declined in high-crypto areas. This trend indicates that crypto earnings may be assisting some households in managing their auto loan payments more effectively.
Since the 2008 banking crisis, single-family home ownership has struggled to recover. However, there has been a consistent rise in figures since the inception of Bitcoin in 2009. While the correlation does not imply causation, it is noteworthy that the 2021 bull run and subsequent bear market in 2022 also corresponded with increases and declines in new single-family homes.
Despite the positive trends observed, the researchers caution about potential risks associated with escalating debt and leverage among low-income households heavily exposed to crypto. While delinquencies are currently low, any economic downturn or a slump in the crypto market could lead to financial instability. The researchers emphasize the importance of monitoring the increased debt balances and leverage among low-income households with crypto exposure to prevent future financial stress, especially if these high-risk consumers are concentrated in systemically important institutions.
In conclusion, the report sheds light on how crypto profits are reshaping financial behaviors, particularly in low-income communities, offering a glimpse into the opportunities and risks associated with leveraging cryptocurrencies for homeownership.