The American Dream of owning a home has fallen victim to rising prices and ever-higher interest rates.
The term “American Dream” wasn’t created to cover homeownership, although that’s largely the way things turned out.
The phrase originated, in 1931 when historian James Truslow Adams cited “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement” in his book, “Epic of America”.
In the last 90 years or so, the most common example used to define the “American Dream” was – and still is – home ownership. Owning a piece of land and a home structure has resonated deeply in the hearts of generation after generation of U.S. families, including legions of immigrants landing on U.S. shores from across the world.
In recent months, however, the term “American Dream” has taken a turn for the worst, as grabbing the brass ring of ownership proves more elusive than at any time in the past century.
As usual, money is at the heart of the matter.
Exhibit “A” is a new study by IPX1031, a Fidelity National Financial Company, which states that 90% of Americans believe owning a home is part of the American dream… but 51% say it isn’t attainable. Additionally, 94% are not currently living in their ideal home, with the main reason being they can’t afford it.
That’s not all. Americans are readjusting their attitudes on homeownership in a time of great financial pain for tens of millions of people.
The report found out the following things:
33% of Americans believe home ownership is a necessity in 2022, 67% think it’s a lifestyle choiceOnly 45% of renters, across generations, say they plan on buying a home within the next 5 years94% are not currently living in their ideal home, with the main reason being they can’t afford it
More than half of Millennials said their dream home would cost between $500,000 and more than $1 million.
Many Americans Settle for a Smaller Home
The concept of a “dream home” has now changed for most families, as many homebuyers are settling for “A home” and not the perfect property.
“This wasn’t the case a decade ago,” said Michaela Green, a licensed real estate agent in Houston, Tx. “Now, with less inventory, there is also a challenge for home buyers to find homes in areas they like at a price point they can afford.”
External financial factors are fueling discontent among homebuyers, especially younger ones.
“More young professionals are entering the age where, in the past, they could purchase a home,” Green told TheStreet. “Many younger professionals are also stressed with paying off student loan debt and making ends meet.”
Inflation doesn’t help when going through the home-buying process, either. “Everyday items are now costing a significant amount more than a year ago which also affects how much everyone is able to save for a home,” Green added.
Dare to Dream, Real Estate Experts Say
There is compelling evidence the dream home is not out of reach, especially over the long term.
“Many savvy buyers have opted to build their homes with either a custom home builder or a spec home builder,” Green said. “They’ll not only have the option to have customization options but sometimes they may even pay for the home at cost as opposed to paying for the home at market value.”
Taking the long view and planning accordingly can also fuel a successful homebuying experience.
“As a lender, I see people at all income levels buy homes,” said Guaranteed Rate Mortgage senior vice president of lending Jennifer Beeston. “It’s important to not let a headline shape your perspective of home ownership. Talk to a lender and get a game plan.”
“I talk to people who may not be buying for a few years but we talk about a plan so that their dream becomes a reality,” Beeston told The Street.
In that regard, the “dream home” is never out of reach – not if you really want it.
“You may just have to get a bit creative when events in the market change and adjust on the fly,” Green added.