As home ownership dreams fade, renters consume more, work less, and take on riskier investments

“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, we project 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.

The model also shows that 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.

…producing substantially greater wealth dispersion between those who retain hope of homeownership and those who give up.”

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5770722