Crypto Gains Let Poor People Buy Houses, U.S. Research Finds, But Risks May Lurk

The
Treasury
Department’s
research
arm
was
looking
for
dangers
in
crypto
households
amping
up
their
debt,
but
they
found
people
buying
houses
with
few
problems.

Nov
26,
2024,
8:48 p.m.

Crypto
investing
may
have
allowed
lower-income
Americans
to

buy
their
own
homes
at
a
higher
rate
than
the
rest
of
the
population,
according
to
a
paper
released
Tuesday
by
the
U.S.
Treasury’s
Office
of
Financial
Research.

The
rise
in
cryptocurrency
investment
in
recent
years
came
with
a
pronounced
uptick
in
debt
—
most
notably
mortgages
—
sought
in
the
areas
where
digital
assets
activity
was
highest,
according
to
the
research
conducted
by
the
Treasury’s
independent
arm
that
sniffs
out
U.S.
economic
hazards.
It
was
looking
for
evidence
that
such
financial
stretching
may
be
a
danger
to
U.S.
stability,
but
so
far
the
researchers
found
that
delinquency
rates
in
those
places
have
remained
low.

“Low-income
consumers
in
high-crypto
exposure
areas
are
disproportionately
more
likely
to
take
out
a
mortgage,
and
the
average
mortgage
size
is
large
relative
to
pre-2020
average
income,”
the
paper
concluded.

“There
is
little
or
no
evidence
of
higher
levels
of
distress
in
mortgage,
auto,
or
credit
card
debt
among
consumers
in
high-crypto
exposure
neighborhoods,”
according
to
the
report.
“If
anything,
delinquency
rates
remain
relatively
low.”

This
potentially
sunny
piece
of
federal
research
could
further
bolster
the
case
of
incoming
presidential
administration
officials
who
seek
to
clear
a
path
for
greater
U.S.
crypto
adoptions.
President-elect
Donald
Trump
is
expected
to
appoint
financial
regulators
who
favor
friendly
regulations
and
lighter
enforcement
in
the
digital
assets
sector.

The
OFR
paper
cautioned
that
these
crypto
households
will
warrant
close
observation
in
a
financial
downturn
to
see
if
such
stresses
expose
them
as
a
risk
to
the
U.S.
mortgage
market.
Cryptocurrencies
have
remained
a
much
more
volatile
investment
than
most
other
asset
classes.

“An
important
takeaway
for
future
monitoring
is
the
increased
debt
balances
and
leverage
among
low-income
households
with
crypto
exposure,”
the
report
noted.
“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.”

The
OFR’s
numbers
suggested
a
274%
increase
in
mortgages
in
high-crypto,
low-income
areas
between
2020
and
2024,
and
the
average
mortgage
balances
were
much
higher
than
low-income
zones
with
less
digital
assets
activity.
They
were
even
significantly
higher
than
in
middle-income
areas.

“Crypto
sales
may
have
supported
access
to
larger
mortgages
through
bigger
down
payments,”
according
to
the
findings.

The
study
relied
on
U.S.
tax
data
to
find
crypto
concentrations,
and
because
the
latest
available
data
was
from
2021,
the
crypto
sales
would
likely
have
been
at
the
height
of
the
market
before
the
industry’s
2022
collapse
–
meaning
sales
were
more
likely
to
result
in
significant
gains.
The
investors
apparently
used
those
gains
to
back
their
other
financial
moves,
including
much
higher
purchase
of
homes
and
cars.
But
the
OFR’s
credit
data
was
as
recent
as
this
year.

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