Generation after generation throughout modern United States history have considered owning a home a big part of the American dream. A house in the suburbs was always a symbol of something far greater than just a place to live or even a good investment – it was aligned with the best characteristics of our society – opportunity, safety, stability, investing in a better future, a place to raise a blossoming family, and even hard work and education. However the real estate bust and recession brought hard times. Millions of Americans lost their homes and so many others lost equity in an investment they perceived as rock solid. Some experts even have questioned the premise of owning a home as a good investment. So have the attitudes of regular citizens shifted from the view of owning home as part of the American dream? Not at all, by all indicators – the dream is alive and well.
"The most tangible cornerstone that lies at the heart of the American Dream, at the heart of middle-class life, is the chance to own your own home.” Declared President Obama during a speech this summer. It’s a sentiment that’s been echoed by every U.S. President – regardless of political affiliation and beliefs.
The idea of home ownership as the American dream started post WWII. As soldiers returned home in droves from overseas, intent on settling down, marrying their sweethearts, and starting families, the U.S. government had some crucial decisions to make. Did they want the government to be in the housing business? They did not, so instead they gave huge financial incentives to those who owned their own homes, incentivizing a private solution. The economy boomed, the population exploded, and home ownership became that cornerstone of the American dream – a mark of a middle class lifestyle open to anyone.
But now, post recession and housing bust, people have been forced to adapt their expectations and goals with housing. Is it better to rent? Are the ups and down’s of a sometimes volatile market too risky to weather? Does an increasingly mobile population even want to stay put in one address anymore? Is housing still a good investment?
We went past the story of what housing means to the American dream and instead looked at hard numbers. What we found was overwhelmingly encouraging.
A 2012 Pew survey found that 86 percent of Americans now believe the key to a middle class life is a secure job, and only 45% say the same about owning a home.
While back in 1991, 70% of respondents in a CNN/Time/Yankelovich Partners poll said home ownership was essential to membership in the middle class membership, while only about 50% said it was a white-collar job. So there has been a cultural shift from home ownership as a bedrock of security toward good income from a stable job.
In fact, since 2004 the overall rate of home ownership has declined from 69.2% to 65%.
But there is something essential to understand when interpreting data that tracks attitudes about home ownership and the American dream; there are those who own a home, and those who want to own a home, but can not, usually because of economic factors.
With that in mind, we can attribute the recent recession, job losses, foreclosures, loss of equity, tightening credit standards as factors that have kept people away from home ownership who otherwise would love to buy. The data backs this up.
If we look at home ownership rates in the last 50+ years, we’ll see that numbers have always fluctuated based on economic and market conditions, but have consistently remained within the 62%-68% range, with a comfortable median around 64-65%. Thats remarkable consistency if you consider the changing times.
American home ownership rates:
The highest level of all time was in 2004 at 69%, but we’ve never cracked 70%. So when we talk about housing declining 4% in the last 5 years, that’s off of an all-time high.
The lowest point of home ownership was in 1960 and 1961 in the 62% and change range, but it’s never dipped anywhere near 62% again.
A recent survey states that 51% of people said the bust did not change their willingness to buy a home and an additional 27% said it actually made them more likely to do so. That’s about 78% of the population who want to hold keys to their own front door. Indeed, nearly two-thirds of people surveyed still believe purchasing a house is a safe investment.
A huge majority of those with that goal - 86% of those surveyed, list the income-tax benefits of owning a home as a big reason to buy. Being able to choose a good school system for their kids, privacy, and being free to fix up their home as they wish were also important factors. Perhaps those ideals have changed from the idea that one would live in their home 30 years, pay it off in one loan, and then enjoy a retirement mortgage-payment free. These days, holding long enough to gain appreciation, tax deductions, and the alarmingly high cost of renting are more important.
A recent Gallup poll concluded:
- 25% don’t own now but plan on owning a home within the next 10 years.
- 11% don’t want to own a home and have no plans to buy, and
- 3% own a home but will sell and rent within the next 10 years.
- But an overwhelming 81% either own a home now and want to keep owning or want to buy within the next 10 years, numbers that have not dropped one iota over the decades.
Surprisingly, the American dream spreads across all age demographics, too.
- When it comes to Millenials, 68% of Americans age 18-29 do not own a home but plan on buying one within the next 10 years.
- 21% are already homeowners, which leaves only 11% that don’t own and don’t want to.
What about the Baby Boomers who are looking to retire or already in their golden years?
- Of the 50-64 age group, 71% say they own and want to continue to own.
- For people 65 years and older, 69% say they will continue to own, while only 7% say they are planning to sell their home and rent somewhere, a very low number that refutes the perception of seniors chasing out their equity to rent hassle-free, downsize, or become snow birds.
Certainly, looking at the big picture reveals that owning home is still the American dream, just updated to modern circumstances.