•Housing affordability has declined sharply in recent decades, leading many younger generations to give up on homeownership.
•Using a calibrated life-cycle model matched to U.S. data, it is projected that the cohort born in the 1990s will reach retirement with a homeownership rate roughly 9.6 percentage points lower than that of their parents’ generation.
•As households’ perceived probability of attaining homeownership falls, they systematically shift their behavior: they consume more relative to their wealth, reduce work effort, and take on riskier investments.
•Renters with relatively low wealth exhibit the same patterns. These responses compound over the life cycle, producing substantially greater wealth dispersion between those who retain hope of homeownership and those who give up.
The real reason for Gen Z being all in on crypto
Gen Z is all in on the crypto market, according to the latest crypto news. Young Americans are turning to crypto gambling because buying a home is out of reach, a study released on November 19 has found.
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The research indicates that a rise in the median US house price-to-income ratio from 1984 to 2022 has added almost two extra years to the time needed to buy the same home, prompting young adults to seek alternative ways to finance their aspirations for homeownership.
It is widely understood that younger generations invest in digital assets more often than their parents.
This is usually attributed to a stronger faith in crypto or a better understanding of online finance compared to older age groups.
The report, however, offers a bleaker view, arguing that many of those placing bets on digital assets are not driven by ideology or a desire to replace the financial system, but by a sense of desperation.
Why Are Renters More Likely Than Homeowners to Invest in Crypto?
Although the research focused on US youth, it reported a comparable pattern in other countries.
‘Discouraged renters’
When renters decide that owning a home is no longer realistic, their conduct shifts sharply and for the long term.
For example, according to a recent FINRA research paper, American Renters and Financial Fragility, discouraged renters spend about 10% more on credit cards than homeowners with the same level of wealth.
They are also almost twice as likely to say “working hard is not important,” a sign of what researchers, and many employers, describe as “quiet quitting.”
Renters with assets under $300,000 are far more involved in crypto markets than homeowners with similar finances.
The trend is strongest among people holding between $50,000 and $300,000, too well-off to give up, but unable to buy property.
When renters have a net worth of less than $50,000, investment activity largely stops, not due to a lack of interest, but because there is no spare cash left to risk.
Researchers Lee and Yoo describe crypto investing among younger people as a “last resort” a high-risk gamble taken to close an affordability gap that everyday savings can no longer bridge.
Two Renters Who End Up on Very Different Paths
They argue the reasoning, while bleak, is not hard to follow.
With basic living standards partly protected by welfare support, discouraged renters feel able to take speculative bets on assets such as cryptocurrency, believing the worst-case outcome is limited, the authors wrote.
But the long-term effects, the study warns, can be severe.
Over time, two renters who begin with similar savings can drift onto very different paths. Those who give up on owning a home are more likely to sink into what the report describes as a near-zero wealth trap.
By contrast, peers who still believe homeownership is achievable continue to build assets gradually.
The outlook for younger generations is stark. People born in the 1990s are expected to reach retirement with a homeownership rate 9.6 percentage points lower than their parents, according to the projections.
The pressures described in the research are not limited to the United States.
In South Korea, many young adults refer to themselves as the “Sampo generation,” a label for those who have given up on dating, marriage, and having children because housing has become too expensive.
In Japan, a similar mindset has taken hold among younger people who identify with “Satori,” a term meaning detachment from material goals.
For many, it reflects the belief that owning a home and building a traditional career are out of reach.
What’s so sad about the anti-home ownership propaganda is that many of these writers have a vested interest in the growing crypto market. They sucker in the reader from ever wanting to own a home or taking their eye of the ball.