Is Homeownership Still the American Dream?
In America, it has always been everyone’s dream to own a nice house with a picket fence and a cozy porch. That was the ideal back then, but how does this dream fair in today’s reality?
Without a doubt, we can only paint a bleak picture for homeownership in the country as millennials struggle to even afford the downpayment for a single-family property. Citing a study by Bank of the West, Housing Wire reports that “nearly a quarter of Millennials say they’ve given up on their dreams of homeownership.”
This pessimism is not without any clear reason. That said, let’s dissect some of the most crucial factors over why today’s generation of homebuyers are calling off their pursuit of the American Dream.
One barrier that has affected millennials’ capacity for homeownership is the amount of loan payments they shoulder. In total, over 43 million adult Americans owe over $1.5 trillion in federal student debt. This would include college students who haven’t even entered their last year but still have monumental bills to face once they step out into the real world.
Applying for a mortgage is even more of a challenge as banks require high credit scores in order to approve home financing. Having a high student loan that takes a long time to write off affects one’s ability to obtain a mortgage. This only explains the consistent downtrend of homeownership among young adults relative to a constant increase of student debt.
The high cost of college education, as this Fortune article puts it, is the culprit behind homeownership declines. As policy-makers are urged to grant larger subsidies to public universities and colleges in an attempt to lower tuition, millennials who have already graduated are settling down in apartment rentals rather than having themselves pinned down by even more debt through homeownership.
Looking at the issue further, however, we can find another crucial factor that’s supposed to bring about the “death” of the American Dream.
Financing is just one dimension of the homeownership problem. Culture is integral as well. Millennials are changing traditional notions towards homeownership. This is a generation that takes particular interest with the lifestyles they lead rather than the idea of settling down in a suburban neighborhood.
This is also a generation that has its own set of values and expectations that are skewed towards technological adoption and liberal politics. Decisions such as buying a home or renting an apartment are influenced by a desire to reconstruct current social paradigms. So, can we consider the American Dream as a casualty of this reconstruction?
The assumption that millennials aren’t buying homes “just because” fails to take notice of a cooling-off period right before they begin fulfilling the American Dream.
According to sociology professor Brian McCabe:
“For a lot of millennials, they’ll spend some time in the city in their 20s before they move out to the suburbs,… Maybe the draw of buying a home kicks in a little bit later. They might not be thinking about building wealth and starting families as young.”
Student debt and changing attitudes towards homeownership haven’t really affected the real estate market. In fact, homeownership grew considerably during the fourth quarter of last year, indicating a switch from renting to buying as millennials have finally entered new territory despite affordability and inventory issues.
The American Dream isn’t dead after all. We just have to wake it up by taking action in the face of homeownership challenges that lie ahead.
To turn your dream into reality, you just have to look for a realtor you can trust your needs with. Contact Arbrook Realty today and fulfill your American Dream!