Across many developed economies – including the US, UK and Western Europe – owning a home has long been treated as a cornerstone of financial security and adulthood. Yet for younger generations, that cornerstone is now rapidly crumbling. A new research paper by Seung Hyeong Lee and Younggeun Yoo, published on SSRN in November 2025, gives us one of the clearest explanations yet of how declining housing affordability is changing not just financial outcomes, but people’s behaviour, motivation, and economic decision-making across their entire working lives. And this has a profound impact on how we attract, hire, develop and compensate emerging generations in the workplace.

Using a calibrated life-cycle model matched to decades of U.S. data, the research show that younger cohorts face dramatically reduced prospects of ever becoming homeowners. Individuals born in the 1990s, for example, are projected to enter retirement with homeownership rates almost 10% lower than previous generations. But the real insight from the study lies not only in the declining numbers – it lies in how people respond when homeownership slips out of reach.

The authors identify a critical psychological and economic tipping point they call the “giving-up” threshold. When individuals perceive that buying a home is no longer an attainable goal, their entire set of financial behaviours changes:

• Higher consumption: People spend more in the present instead of saving for a future down payment
• Lower work effort: Reduced motivation emerges when long-term financial goals fade from view
• Riskier investments: Those who abandon homeownership often turn to higher-risk assets to compensate for lost wealth-building opportunities

Instead of saving diligently for a down payment, they tend to consume more of their income in the present. Rather than increasing work effort to boost earnings, they pull back – particularly renters with lower wealth, whose work patterns resemble those who have already abandoned homeownership ambitions.

So how does this impact HR and Talent professionals?

The link between personal finances and financial goals is clear – home ownership, family, personal development, learning, promotion and achievement are all impacted when they seem unattainable

These behaviours compound over time, widening wealth inequality and reducing economic resilience. Importantly, the study found that current renters with lower wealth already exhibit these patterns, confirming the model’s predictions.

The traditional pathways to growth and development become blocked.

Work becomes more about the experience – with leadership, learning, mentorship, job design, wellbeing, mental health, meaning and purpose all  combining to create ‘good work’. It needs to be fulfilling and to lead somewhere better.

Whilst the research paper called for restoring a sense of attainable homeownership – which would be hugely significant – it is up to organisations in the mean time to find ways to give work a sense of meaning and purpose.

(Also check out my recent post on Work vs Welfare)