Low-income households in the United States are turning crypto gains into homeownership opportunities, as shown in a November 26 report report from the Office of Financial Research (OFR), a research arm of the U.S. Treasury Department.
Samuel Hughes, Francisco Ilabaca, Jacob Lockwood and Kevin Zhao conducted the research using tax records. It provides a crucial look at how crypto shapes financial behavior in economically vulnerable communities.
Mortgage loans and car debt
The report noted the rise of “high-crypto” areas, defined as zip codes where more than 6% of households reported crypto holdings on tax returns. These regions have seen a significant increase in mortgage and car lending, coinciding with significant gains in the crypto market.
In these cryptocurrency-heavy areas, low-income households experienced a surge in mortgage activity between 2020 and 2024. The number of consumers with a mortgage grew by more than 250%, while the average mortgage balance increased from $172,000 in 2020 to $443,000 in 2024, an increase of more than 150%.
These numbers suggest that crypto windfalls have enabled many families to take out larger loans and enter the housing market.
The report stated:
“For low-income households, average mortgage debt and mortgage interest rates have risen sharply in zip codes with high cryptocurrency exposure. This indicates that low-income households may be using crypto profits to take out new mortgages and take out larger mortgages.”
The report also sheds light on auto loan trends in these areas. Among low-income households, car loans rose most strongly in regions with high crypto levels. Interestingly, while crime rates increased in zip codes with low and medium crypto assets, they fell in high crypto areas. This pattern suggests that crypto income could help some households manage car loan payments more effectively.
Since the 2008 banking crisis, which led to widespread defaults, single-family home ownership has never recovered. However, since the introduction of Bitcoin in 2009, the numbers have continued to rise. While the correlation is not indicative of causation, it is interesting to note that the 2021 bull run and subsequent 2022 bear market also saw increases and decreases in the number of new single-family homes.
![US Census Bureau and US Department of Housing and Urban Development have started new private housing: single-family homes [HOUST1F]collected from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/HOUST1F, November 27, 2024](https://cryptoslate.com/wp-content/uploads/2024/11/fredgraph-1-1024x349.png)
Risks
Despite these positive trends, the researchers warn of potential risks associated with rising debt and debt among low-income households with significant exposure to cryptocurrencies.
While delinquencies remain low overall, economic downturns or a crypto market slump could lead to financial instability. The concentration of exposure to systemically important institutions could amplify these risks.
The researchers concluded:
“An important lesson for future monitoring is the increased debt and debt among low-income households exposed to cryptocurrencies. The increasing distress among this group could create future financial stress, especially if exposure to these types of highly leveraged, high-risk consumers is concentrated in systemically important institutions.”
