Giving Up on Homeownership Can Hurt You in the Long Run

For generations, homeownership has been a cornerstone of the American Dream. Owning a home represents stability, a way to build credit, and a powerful path to long-term wealth through equity.

But today, that dream feels increasingly out of reach.

As home prices in the United States continue to outpace wage growth, more young Americans are starting to question whether they will ever own a home at all.

A Growing Sense of Hopelessness

The numbers tell a concerning story.

• A 2022 survey by Apartment List found that nearly 25% of millennials expect to rent forever — almost double the 13% recorded in 2018.

• A 2024 Harris Poll revealed that 42% of U.S. adults — and nearly half of Gen Z — agree with the statement:“No matter how hard I work, I will never be able to afford a home I really love.”

That’s not just a housing issue. It’s a psychological shift with potentially long-term economic consequences.

What Happens When People Stop Believing?

Economists studying this trend wanted to understand how fading hopes of homeownership might shape financial behavior over a lifetime.

To explore this, researchers built a mathematical model simulating household financial decisions from age 20 to 75. The model incorporated:

• Wage growth and volatility

• Rising home prices

• Savings patterns

• Mortgage debt

• Risk tolerance

• Desire to pass wealth to children

Using real-world data from the Federal Reserve’s Survey of Consumer Finances and U.S. Census data, they compared generations and projected outcomes.

The findings were striking.

Roughly 84% of people born in 1950 eventually purchased a home — closely matching real Census data.

But only 74% of those born in 1990 are expected to reach that milestone.

That 10-percentage-point drop may seem modest — but its ripple effects are profound.

The Fork in the Road at Age 20

The research compared two hypothetical 20-year-old renters who start with similar financial resources.

The Hopeful Renter

This individual believes homeownership is achievable. As a result, they:

• Save aggressively

• Work harder

• Accumulate wealth steadily

• Eventually purchase a home

• Continue building equity and savings into later life

The Discouraged Renter

This individual sees homeownership as unlikely. Over time, they:

• Save less

• Consume more relative to their wealth

• Take riskier financial bets

• Accumulate little to no assets

• Live largely paycheck to paycheck

The divergence begins early — when the decision to save for a house is either embraced or abandoned. That single turning point can lead to enormous differences in lifetime wealth.

Riskier Bets and Reduced Work Effort

When housing feels unattainable, people may redirect their financial energy elsewhere.

Researchers observed that renters with a net worth below $300,000 are significantly more likely than comparable homeowners to invest in cryptocurrencies. Among wealthier Americans, homeowners and renters invest in crypto at similar rates. But among lower-net-worth households, renters are far more likely to take these speculative risks.

It may be an attempt to “gamble” back into the housing market.

Work behavior also shifts.

Among homeowners, only about 2% to 3% report reduced work effort, regardless of wealth level. The same holds for high-net-worth renters.

But among renters with lower net worth, the share reporting lower work effort rises to 4% to 6%.

While critics sometimes label these patterns as laziness or “quiet quitting,” the research suggests a deeper structural explanation: when long-term incentives fade, behavior changes.

If working harder no longer brings you closer to buying a home, motivation weakens.

The Broader Economic Impact

The consequences extend beyond individual households.

The model suggests that people who give up on homeownership may:

• Work fewer hours

• Earn less income

• Pay less in taxes

• Contribute less to overall economic productivity

Over time, this could shift fiscal burdens and reduce economic growth.

The housing affordability crisis isn’t just about ownership rates — it may influence national productivity and wealth formation.

Can Policy Restore Hope?

Policymakers have proposed various solutions to address affordability, including mortgage bond stimulus programs and efforts to increase housing supply.

While the effectiveness of specific proposals remains debated, the research suggests one key insight: Timing matters.

If financial support reaches households before they give up, it may reinforce saving behavior and long-term planning. But once discouragement sets in and habits change, reversing course becomes much more difficult.

In other words, hope itself may be a critical economic asset.

The Bigger Picture

Forgoing homeownership can be a rational response to skyrocketing prices. Saving for years only to watch homes become even more unaffordable is discouraging.

But the long-term behavioral effects of giving up may be far more costly than many realize.

Homeownership has traditionally served as a powerful anchor for disciplined saving, career ambition, and wealth building. When that anchor disappears, financial trajectories can shift dramatically.

The housing affordability crisis may not only reshape who owns homes — it may reshape how an entire generation works, saves, invests, and builds wealth.

And that could have consequences lasting far beyond the housing market itself.

Source: Bloomberg

Can One Income Still Buy a Home? Lessons from The Simpsons

For many viewers, The Simpsons feels unrealistic—not because the characters are bright yellow or because Homer is somehow a nuclear safety inspector, but because the Simpson family enjoys a comfortable middle-class life on just one income. A detached home, a car, and the occasional family holiday, all supported by a single breadwinner with only a high-school education, feels increasingly out of reach for modern homebuyers.

In today’s housing market, single-income households are becoming rare. Data from the United States show a sharp shift over the past several decades. In 1960, more than three-quarters of young married couples who had just bought a home relied on one income. Today, that figure is closer to one in three. While this reflects positive changes—such as greater employment opportunities for women—it also highlights the rising cost of homeownership and family life.

From the 1960s through 2000, more women entered the workforce, with participation rates among prime-age women rising from around 40% to over 75%. Although that growth has leveled off in recent years, the share of single-income homebuyers has continued to fall. The steepest drop occurred between 2012 and 2023, a period marked by rapidly rising home prices. In short, dual incomes are now often necessary not just for lifestyle upgrades but for basic affordability.

The debate around single-income families continues. Some analysts argue that dual-income households have helped push up the cost of housing, childcare, healthcare, and education. Others say that many families would prefer one parent to stay home, but financial realities make that difficult. Surveys suggest that about half of American mothers would prefer to stay home rather than work, yet most continue working—largely because the additional income is essential.

Housing costs play a major role in these decisions. Studies show that in families where the primary earner’s income rises significantly, the likelihood of the other partner working full-time drops—but mostly among homeowners rather than renters. This suggests that once housing is secured and financial pressure eases, some families choose to scale back to a single income. However, the income required to make that possible today is far higher than it was in previous generations.

It’s important to note that this isn’t simply a story of hardship. Many people enjoy their careers and choose to work for reasons beyond necessity. Expectations have also changed. Homes today are larger, more comfortable, and better equipped than those in the mid-20th century. With bigger homes and higher living standards come higher costs—and often the need for two incomes.

For real estate professionals and homebuyers alike, the takeaway is clear: housing affordability and lifestyle expectations are deeply connected. If housing were easier and cheaper to build, more families might find it feasible to live on a single income again. Until then, the “Simpsons-style” single-breadwinner household remains more of a nostalgic ideal than a common reality.

Source: The Economist

Can tokens take the agony out of housebuying?

Blockchain could transform financial transactions as money moves at ‘the speed of light’. Tokenisation is now the City of London’s new buzzword

Homebuyers are all too familiar with the agony of completion day. Calls fly back and forth between estate agents and solicitors to see if funds have moved up the chain. Only once the money has landed in everyone’s bank accounts will the sought after keys be released. That pain may soon be a thing of the past under new plans to digitise payments: so-called tokenisation — the new buzzword in financial circles.

If implemented, the technology could revolutionise not just housebuying but payments between buyers and sellers of all stripes. It could even enable consumers to buy assets in fractions — a slice of a gold bar, for example. Trade body TheCityUK reckons London needs to be a leader in tokenisation if it is to maintain its status as a top financial centre. In a recent report with professional services firm PwC, it predicted that tokenised assets would become the “default way in which securities and assets are traded” — and warned there was a risk of regulation falling behind.

At TheCityUK annual dinner last week, chair Omar Ali warned guest speaker Lucy Rigby, the City minister, other countries were “going faster” in the race for digital supremacy, particularly the US, the United Arab Emirates, Hong Kong and Singapore. “This is fantastically important because it’s the future of the industry,” Rigby acknowledged.

So what is tokenisation, and what does it mean for you and I? Some see it as merely the latest iteration of City share trading. Young men once used to run around the Square Mile distributing pieces of paper to show share transactions. In the 1980s, this was replaced with electronic bank transfers.

A building, a real asset, could be represented by 1,000 tokens

Tokenisation tends to use blockchain technology — a type of decentralised digital ledger that is perhaps better known as the basis for cryptocurrency. “A blockchain is a type of database for record-keeping,” said Kara Kennedy at JP Morgan. “Today [in securities markets] record-keeping is maintained on ledgers held by centralised institutions; a blockchain is a decentralised ledger that enables transfers to take place peer-to-peer.”

In effect, this decentralisation removes the need for a main repository like a central bank. But what, then, is a token? “Tokenisation is essentially the representation of an asset or value on the blockchain.

That’s its simplest form,” said Kennedy, who is based in Edinburgh and is global co-head of the American bank’s blockchain business, known as Kinexys. So why does it matter? After all, the Bank for International Settlements, the central bankers’ bank, points out people have been transacting in tokens for centuries, citing the Chinese use of seashells as a form of currency 3,000 years ago.

But this new form of tokenisation is more sophisticated than modern money. For instance, digital tokens are programmable, which means you can set conditions for when money is released. Sasha Mills, the executive director of financial markets infrastructure at the Bank of England, explained the ramifications: “If I’m standing on my doorstep, waiting for my online shopping, the money doesn’t go through until I’ve got the goods in my hand.”

Manish Kohli, head of HSBC’s global payments solutions business, said that, with tokens, money could also “move at the speed of light”. Speaking from New York, he explained that assets could be broken up into tokens to make them more affordable — like the tower he was sitting in. “This building, a real asset, could be represented in 1,000 tokens, say, which can be sold to individuals,” he said. In Hong Kong, HSBC is using the concept to give retail customers access to gold. “Gold is very clunky to own because it’s heavy, it’s difficult to transport,” he said.

With this new technology, customers could own a digital token representing a fraction of that gold. In the financial markets, tokenisation could also enable more efficient borrowing. Kennedy said: “If a company has cash coming in at midday but needs to borrow for two or three hours until it arrives, you can use a blockchain-based intraday loan to borrow for a certain period of time.” That period could be as short as hours or even minutes. Mills at the Bank of England pointed to the use of tokenisation in posting collateral — a sort of guarantee for a transaction.

She believes it could help facilitate growth in the economy, as the same collateral could be put up to support a larger number of transactions. “I can programme my money so I can use my collateral for a few hours in a jurisdiction,” she said. “It’s very efficient, which is obviously beneficial for growth.”

But the City is clearly racked with anxiety that Britain is falling behind in the race to harness digital assets, especially after President Trump published an act last year to set out rules for dollar-denominated stablecoins (a type of cryptocurrency backed by a traditional currency). As the name suggests, their value is supposed to be more stable, unlike cryptocurrencies such as bitcoin, which float freely; last week bitcoin suffered another sharp fall in its value. These are different to the “tokenised deposits” that, for instance, a high street bank would use.

The Bank is consulting on a regime where it would stand behind stablecoins issued in pounds. Mills said: “For stablecoins to operate in the UK, in sterling, they need to meet the standards of money. What we’ve done is to say that if it looks and smells like money, we need to ensure it operates like money; we will be a banker to those stablecoins.”

She was talking about stablecoins for everyday usage, not ones to buy crypto. “From the Bank of England’s perspective, we want all money to be trusted and robust, regardless of whether it’s a digital form of something, a traditional form or a new form.” She took issue with the suggestion the UK was falling behind.

While Trump’s act has been published, the details are still being worked through. Mills said there would be a “live regime” for stablecoin issuance here by the end of the year. The Bank is running a sandbox regime — where market players can test their ideas without risk of punishment when things go wrong — for other digital issues. It has already tested the idea of using tokens to speed up housebuying through tests with the Land Registry.

The financial industry is also running the Great British Tokenised Deposit project, led by UK Finance, and in the summer will begin to test remortgaging, peer-to-peer transactions and digital bond settlement. And the government is working on a digital gilt, known as a “digit”, which Rigby hopes “is going to catalyse the use of some of this technology”.

Announcements on this project are expected in the next week. But the City’s frustration is also generated by the government’s failure to name a “digital markets champion” six months after promising to do so. Those in the industry note that tokenisation has been used within banks but not so much between banks, which will be the next stage of development.

And some, such as Hilary Allen, a professor at the American University Washington College of Law, warn of a “dark side” to tokenisation, which could feed instability in financial markets in times of turmoil. While the the idea of a tokenised remortgage might seem a long way from reality, Peter Left, the head of digital and markets innovation at Lloyds Banking Group, said: “It’s an aspiration … this could become more prevalent within a time frame of 12 months.”

Source: The Sunday Times