Crypto industry expands its presence in the U.S. housing market

Cryptocurrency has made a notable foray into the housing market in the United States, with the country’s largest mortgage finance firms now accepting it as an asset on mortgage applications. This move by the Trump administration has brought digital currencies further into mainstream finance. President Donald Trump’s housing director, William Pulte, recently announced that Fannie Mae and Freddie Mac, two major mortgage finance firms, will start considering homebuyers’ crypto investments as part of their overall wealth in determining mortgage affordability. In the past, mortgage lenders primarily focused on a homebuyer’s cash savings and stock investments.

Fannie and Freddie are crucial players in the housing market as they purchase mortgages from banks and establish criteria for accepting borrowers’ mortgages. The directive issued by Pulte to recognize crypto investments comes at a time when an increasing number of Americans are using digital currencies to buy houses. Additionally, new companies have emerged to help homebuyers utilize their crypto holdings to purchase real estate.

Advocates for cryptocurrencies have long been pushing regulators to embrace this market trend, despite concerns from consumer advocates about tying this unregulated, volatile investment asset to essential sectors like the housing market. Trump, once a crypto critic, has transitioned into a strong supporter of the digital currency movement.

According to Tyler Gellasch, a former SEC lawyer who now leads the Healthy Markets Association, the lack of regulatory oversight has led to rapid developments in this space, with boundaries being pushed at a swift pace. Homebuyers and crypto enthusiasts are increasingly eager for this shift. Recent survey data revealed that approximately 14% of homebuyers intend to sell crypto assets to cover a down payment, a significant increase from 5% in 2019.

For example, David Doss sold a portion of his crypto holdings in 2017 to finance the down payment for a home in New Jersey. He expressed a desire to retain his crypto assets while accessing cash for his purchase, indicating the evolving intersection between crypto and real estate. Pulte’s order now allows homebuyers to preserve their crypto holdings without converting them to cash for mortgage qualifying processes.

Crypto’s influence in the housing market is growing as stagnant home sales are hindering many individuals from selling, buying, or leveraging their home equity through loans. Startups are seizing the opportunity to use crypto to invigorate the industry. One such company, Milo, founded by Josip Rupena, provides investors with a way to use bitcoin as collateral for obtaining a home mortgage. This concept allows investors to post an equivalent amount of bitcoin to secure a mortgage and purchase a home.

Unlike traditional bank mortgages, Milo finances 100% of the transaction without requiring a down payment from the homeowner. Another innovative approach involves homeowners tapping into their home equity to buy crypto, resembling home equity investment contracts. These arrangements allow homeowners to use their equity to purchase bitcoin, creating an alternative investment avenue.

Horizon, a startup, promotes a strategy where homeowners can transform their homes into a “bitcoin acquisition engine.” The company offers cash loans based on home equity, enabling homeowners to invest in bitcoin without monthly payments until the agreement matures. To safeguard their interests, some firms place liens on properties during the contract period. Horizon introduced its offering at a recent bitcoin conference in Las Vegas attended by Donald Trump’s sons, further highlighting the growing influence of cryptocurrencies in the housing domain.