Buy Home With Crypto: Low-Income Investors Leverage Gains
Buy Home With Crypto: Low-Income Areas See Record Growth
A recent study by the United States Treasury highlights an emerging trend among low-income households: leveraging cryptocurrency gains to secure larger mortgages. The research, conducted by economists Samuel Hughes, Francisco Ilabaca, Jacob Lockwood, and Kevin Zhao, reveals that crypto sales have enabled these households to make bigger down payments, resulting in access to higher-value mortgages.
Crypto Exposure Drives a Surge in Mortgage Growth
The study noted a significant rise in mortgage originations and balances in areas with high crypto exposure, defined as zip codes where over 6% of households reported crypto-related tax events. In such regions, the percentage of low-income households with mortgages increased by over 250%, with average mortgage balances climbing from $172,000 in 2020 to $443,000 in 2024—a staggering 150% growth.
Increased Borrowing Brings Financial Opportunities and Risks
While crypto gains have opened doors for homeownership, they have also increased financial leverage among low-income households. In areas with high crypto exposure, mortgage debt-to-income ratios were reported significantly above recommended levels. Though delinquency rates remain low for now, researchers caution that high leverage could lead to financial instability if economic conditions worsen or crypto markets crash.
Future Risks and Systemic Implications
The researchers concluded there is little current evidence of financial distress among crypto-exposed households, but they warned that rising leverage could pose risks in the future. If economic pressures increase, particularly for low-income, high-risk borrowers, systemically important financial institutions could face ripple effects.
Debt Levels Hit Record Highs in the US
This trend aligns with a broader rise in U.S. household debt, which reached a record $17.9 trillion in Q3 2024, according to the Federal Reserve Bank of New York. While crypto gains have temporarily benefited low-income households, researchers emphasize the importance of monitoring this high-leverage behavior to mitigate potential financial stability risks.
The findings underline the dual-edged nature of crypto wealth in transforming financial opportunities while introducing new systemic vulnerabilities.
