Low-income households in the United States are turning crypto profits into opportunities for homeownership, as revealed by a Nov. 26 report from the Office of Financial Research (OFR), a US Treasury Department research arm.
Samuel Hughes, Francisco Ilabaca, Jacob Lockwood, and Kevin Zhao conducted the study based on tax data. It offers a crucial look at how crypto is shaping financial behaviors in economically vulnerable communities.
Mortgage and auto-debts
The report noted the rise of “high-crypto” areas, defined as zip codes where over 6% of households reported crypto holdings in tax filings. These regions have seen a significant uptick in mortgage and auto loan activity, coinciding with substantial crypto market gains.
In these high-crypto areas, low-income households experienced a surge in mortgage activity between 2020 and 2024. The number of consumers with mortgages grew by more than 250%, while average mortgage balances jumped from $172,000 in 2020 to $443,000 in 2024, an increase of over 150%.
These figures suggest that crypto windfalls have enabled many families to secure larger loans and enter the housing market.
The report stated:
“For low-income households, average mortgage debt balances and mortgage-holding rates sharply increased in zip codes with high crypto exposure. This indicates that low-income households may be using crypto gains to take out new mortgages and to take out larger mortgages.”
The report also sheds light on auto loan trends in these areas. Among low-income households, auto loan balances rose most sharply in high-crypto regions. Interestingly, while delinquency rates increased in low- and mid-crypto zip codes, they declined in high-crypto areas. This pattern suggests that crypto earnings may be helping some households manage auto loan payments more effectively.
Since the 2008 banking crisis, which led to widespread defaults, single-family home ownership has never recovered. However, since Bitcoin’s inception in 2009 figures have continued to rise. While the correlation is not indicative of causation, it is interesting to note that the 2021 bull run and subsequent bear market of 2022 also saw increases and declines in new single-family homes.
U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Privately-Owned Housing Units Started: Single-Family Units [HOUST1F], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/HOUST1F, November 27, 2024.
Risks
Despite these positive trends, the researchers warn of potential risks tied to rising debt and leverage among low-income households with significant crypto exposure.
While delinquencies remain low overall, economic downturns or a slump in the crypto market could lead to financial instability. The concentration of exposure in systemically important institutions could amplify these risks.
The researchers concluded:
“An important takeaway for future monitoring is the increased debt balances and leverage among low-income households with crypto exposure. Rising distress in this group could cause future financial stress, especially if exposure to these types of high-leverage, high-risk consumers is concentrated in systemically important institutions.”
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