Housing remains historically unaffordable for many Americans, according to Morgan Stanley analysis. While tough for homebuyers, persistent affordability issues could indirectly benefit cryptocurrency adoption.

Affordability Strains Continue for Housing

Data from Morgan Stanley shows the median monthly mortgage payment has jumped 13% over the past year, topping $240. This reflects the fastest deterioration in affordability since late 2021.

Mortgage rates back above 7% have unwound earlier relief from lower borrowing costs this year. Tight supply amid reluctant selling also keeps pressuring prices.

Home values are still rising on a monthly basis per Case-Shiller data, though gains have decelerated. Annual prices recorded a slight 0.5% decline in May - the third straight negative reading.

crypto-could-be-an-alternative-asset-for-some">Crypto Could Be an Alternative Asset for Some

With home ownership out of reach for many younger Americans, a portion may turn to cryptocurrency as an alternative asset to build wealth.

Crypto is more accessible than real estate with smaller upfront capital required. And with housing supply low, buying a home appears unattainable to many millennials and Gen Z.

So despite crypto's volatility, some may embrace digital assets for their wealth-building potential when priced out of housing. This under-35 demographic has shown the greatest crypto adoption already.

Unaffordable housing could incentivize more young people to allocate disposable income to cryptocurrency as a high-upside asset class.

But Macro Hurdles Remain for Crypto

However, the weak macroeconomic environment presents headwinds for expanded crypto investment near-term.

High inflation leaves less discretionary income to begin with. And with recession fears looming, appetite for speculative assets is depressed across the board.

Before crypto can benefit from a housing affordability catalyst, inflation likely needs to moderate and economic sentiment improve. But over the long-term, unaffordable housing may drive crypto asset allocation.

How Would Gen Z/Millennials Embrace Crypto Further?

If housing remains out of reach for younger Americans, they could turn to crypto by:

• Dedicating more discretionary funds to token accumulation
• Holding crypto for long-term gains rather than short-term trades
• Exploring crypto retirement options like Bitcoin IRAs as alternatives to real estate
• Using crypto earnings to eventually afford housing down payments
• Lobbying for crypto inclusion in economic policymaking due to its growing adoption

"Generation Rent" may increasingly move toward "Generation Crypto" if housing strains persist. Crypto's wealth-building potential offers hope.

What Are the Long-Term Risks of Reliance on Crypto?

While embracing crypto as an alternative asset, younger generations should be cautious of potential risks like:

• Overexposure to a volatile asset class
• Lack of reliable valuation models for crypto
• Geopolitical regulations prohibiting access to digital assets
• Cybersecurity threats like exchange hacks or wallet theft
• Scams preying on new crypto investors without proper diligence

Maintaining a diversified portfolio beyond just cryptocurrency remains wise. Crypto can augment wealth, but likely shouldn't fully replace traditional asset exposure.