​How Homeownership has Become a Less Important Part

How Homeownership has Become a Less Important Part of the American Dream

Every person defines the American Dream a little differently. Most of us can agree that the concepts of equality and opportunity for all are at the center of it, but there are other aspects that people think about, too. Rising from poverty and amassing a fortune through hard work, making a name for yourself in the world - basically, all that feel good stuff that each of us fantasizes about at some point.

Another piece that is often associated with the American Dream is homeownership. Having that nice house with the white picket fence and the dog in the yard has historically been the goal of many Americans, but that seems to be changing.

More people than ever before are ditching homeownership for renting. In fact, just under 63% of Americans own their own homes - the lowest it’s been since 1965. But what’s behind this drop? Why are more and more Americans opting to rent instead of buy?

Economic Factors

One of the biggest reasons why less people are buying homes is the economic instability we’ve experienced in the last decade. The burst of housing bubble hurt a lot of people, and ten years later, folks haven’t forgotten. Home values are always going to be at the mercy of the market, and people are wary to buy when fluctuations happen so frequently. Factor in the current political and global climate, along with the automatization of many jobs, and people become even more reluctant to put down roots and commit significant sums of cash into a property.

Rising Home Prices

In the last few years, many housing markets have seen dramatic increases in home values. While this is great for sellers, it’s not so great for buyers, who are finding it more and more difficult to find affordable homes that meet their needs. The rising prices reflect the current upswing of the market, but incomes haven’t increased at the same rate. With this disparity between incomes and housing costs, it’s become much more challenging to save for down payments and the other costs associated with homeownership. Banks and other lenders have also tightened their financing requirements, so it’s more difficult to secure mortgages than in years past.

Responsibility of Homeownership

Owning your own home comes with a lengthy list of responsibilities, and this is simply not appealing to a large number of people. Regular upkeep and maintenance must be performed to retain the home’s value, there are taxes to be paid, insurance policies to maintain, HOA fees, and more. When you rent, most of these tasks and costs are the responsibility of the landlord, and not you. There’s also the matter of freedom. As a renter, you have much more flexibility in where you live and for how long. This is especially appealing to Millennials, who are much more nomadic than older generations. Being tied down with a mortgage simply doesn't fit their lifestyle.

As America has grown and changed over the years, so too has the American Dream. Equality and opportunity remain central features, but ideas about home ownership that were once focal points have changed. These shifting patterns have given economists, market watchers and those in the real estate industry some major food for thought. For real estate investors, the increasing preference to rent instead of buy means more opportunities to cater to this growing demand. If you want to be a part of the new American Dream, the time to act is now - invest while the market is hot and take advantage of the changing times.