Bitcoin just became a path to homeownership. Here's how
At the end of June, the U.S. Federal Housing Finance Agency issued a new directive, instructing both Fannie Mae and Freddie Mac to count Bitcoin as an asset on single-family home mortgage applications. Previously, mortgage applicants had to convert any Bitcoin holdings into U.S. dollars if they wanted their crypto to count.
Given Bitcoin's rapid price appreciation over the past decade, this move could end up being a real game-changer. Here's why.
The price of housing is out of control
Most people agree that the American dream of buying a new home is currently out of reach. Prices for homes have been soaring, and higher interest rates have put mortgage payments out of reach for many would-be home buyers.
There's plenty of evidence to support this. In July 2024, a CNN survey reported that 86% of all renters said they would like to buy a home but can't afford one. And 54% of those said that it was "unlikely" that they would ever be able to.
The problem is even more profound for young would-be homeowners, who now face a slowing economy and nagging thoughts that AI could be coming for their jobs. How are they ever possibly going to be able to afford a new house?
Bitcoin as a hedge against inflation
And that's where Bitcoin comes into the picture. If you think the prices of new homes are soaring, then what about the price of Bitcoin? In 2022, the price of Bitcoin was $17,000. Today, the price of Bitcoin is $107,000. If you had purchased Bitcoin in 2012, when it was trading for less than $100, you'd be able to afford just about any type of home you could imagine today.
A new 30-second ad from Coinbase Global makes this point perfectly. The Coinbase ad shows a beautiful, two-story, pastel blue suburban home with a manicured lawn — the stuff that homeowner dreams are made of. A voice intones: "In 2012, you'd need 30,000 Bitcoin to buy this house... A decade later, it would only take you 20 Bitcoin... And, today, it could be yours for 5." But the real kicker comes at the end of the ad: "If home prices keep falling in Bitcoin, why do they keep rising in dollars?"
That, in a nutshell, is why investing in Bitcoin could help you afford your next house. Bitcoin is a disinflationary asset and a potential hedge against inflation. Best of all, Bitcoin is widely available to everyone. You don't need to be an accredited investor and you don't need millions of dollars. In fact, most cryptocurrency exchanges will let you start buying Bitcoin with just a few bucks.
How will the new rules work?
The U.S. government is thinking out of the box on this one. According to William J. Pulte, Director of the U.S. Federal Housing Finance Agency, this new thinking about Bitcoin is part of a bigger vision by the Trump administration to make America the "crypto capital of the world." And what better way to do that than by making the American dream of home ownership a reality again?
Right now, it's just a directive, instructing Fannie Mae and Freddie Mac to get busy on this. According to the text of this directive, it will apply to all crypto "evidenced and stored on a U.S.-regulated centralized exchange." And it will give Fannie Mae and Freddie Mac a bit of wiggle room when it comes to adjusting for risk, volatility and overall market conditions.
One big winner in all of this could be centralized cryptocurrency exchanges such as Coinbase. It's still early, but it looks like you won't be able to list Bitcoin as an asset on a mortgage application if you have it stored anywhere else. So, for example, you won't be able to count your Bitcoin if you have it in cold storage on a hardware device hidden under your bed.
Also, the directive doesn't mention spot Bitcoin ETFs, so it will be interesting to see what develops here. With these ETFs, Bitcoin is held only "indirectly," not "directly." So will this Bitcoin count also? If it doesn't, it's easy to envision a scenario in which people stop buying the spot Bitcoin ETFs and shift to buying Bitcoin on Coinbase.
Get ready to buy a new home with Bitcoin
The really exciting part about all this is that many top investors now expect Bitcoin to hit $1 million within the next five years. For example, Cathie Wood of Ark Invest thinks Bitcoin will hit $1.48 million by the year 2030.
Given Bitcoin's current price of $107,000, that's a more than 10x increase within a very short period of time. With those types of gains, you could be well on your way to home ownership in just a few years.
Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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