In many studies, housing’s impact on portfolio choice has been analyzed through house price risk and liquidity constraints. The effects of homeownership on the household’s portfolio choice have regained renewed attention, particularly due to new financial innovations such as cryptocurrencies that promise to change an industry that is very resistant to change. We are also witnessing the emergence of mortgage loan products that utilize volatile digital currencies as collateral or payment methods.

In this Brown Bag session, Dr. Stephen Troveh will discuss his research on The Heterogeneous Impact of Homeownership Type on Risky Asset Choice, which utilizes US household data. His findings suggest that homeowners with mortgage debt are less likely to invest in speculative assets like cryptocurrency compared to the stock market, particularly when the risk gap between asset types is large and household income is below a certain threshold. Additionally, shifts in housing market conditions significantly alter homeowners’ cautious approach to risky asset selection. The study also explores variations across age groups, race, risk profiles, and net worth categories, as well as differences in investment behavior between renters and homeowners.

Dr. Troveh welcomes feedback from faculty and staff on the broader implications of this research as policymakers are looking at integrating cryptocurrency into the banking system.