Changing Perceptions of the ‘American Dream’
Homeownership: the American Dream. A vision created in the post-World War II boom, when returning military from the “Greatest Generation” began populating Levittowns and suburbs all over the country.
Today, however, the American Dream has a very different connotation. A report from Zillow, Seattle, suggests that in 2016, Millennials and their grandparents are most likely to associate homeownership with the American Dream. Additionally, people of color are more likely than white people to connect the two.
The latest Zillow Housing Confidence Index said among people 18-34 years old, 65 percent said homeownership and the American Dream go hand-in-hand, more than any other generation. Similar to millennials, 64 percent of respondents age 65 and older said homeownership is necessary for the good life and the American Dream.
Non-whites were also more likely than white people to consider homeownership integral to the American Dream, the survey said. Of Hispanic respondents surveyed, 70 percent agreed that owning their own home is necessary to live the American Dream, followed by 64 percent of Asian respondents and 63 percent of black respondents. Nearly 60 percent of white respondents agreed.
“The American Dream is really about opportunity, which means a lot of things to a lot of different people,” said Zillow Chief Economist Dr. Svenja Gudell. “For young Americans and Americans of color, the opportunity to own a home is a big part of that dream. It’s often assumed that homeownership holds little interest for these groups, or that they may feel the challenges in achieving homeownership aren’t worth the benefits. But that’s simply not true, and their optimism and determination today will be hugely important to the stability and growth of the housing market tomorrow. These Americans represent the next generation of U.S. homeowners, and for homeownership to eventually become a reality, it has to start as a dream.”
The findings come at a time when the homeownership rate (63.8 percent) is at its lowest level since 1994 and when rising rents and stagnant incomes are making it tough for many Americans to buy homes. Millennials are renting longer than past generations as they put off major life decisions.
But a recent Mortgage Bankers Association research paper, Housing Demand: Demographics and the Numbers Behind the Coming Multi-Million Increase in Households (http://mba.informz.net/MBA/data/images/15292_Research_Growth_White_Paper.pdf), reported nearly 16 million households are expected in the U.S. housing market by 2024, which MBA said should lead to much greater demand for both renter- and owner-occupied housing. MBA Vice President of Research and Economics Lynn Fisher said with an average of 1.6 million additional households per year, housing market growth over the next decade could be among the strongest the U.S. has ever seen.
The MBA report shows the housing demand surge will be driven by Hispanics, Baby Boomers, Asian-Americans and Millennials–the same groups that the Zillow survey said value homeownership. The MBA report identified 5.5-5.7 million more Hispanic households in 2024 than in 2014; 3.4-5.0 million more non-Hispanic White households; 1.8-1.9 million more Asian households; 2.4 million more African-American households; and 730,000-890,000 more “other” households, including Asian-Americans. Growth will be driven by Baby Boomers, with 12.3-12.9 million more households age 60 and over in 2024 than there are today. Millennials will also be a key component of growth raising the ranks of households age 18 to 44 by 4.1-5.1 million.
Zillow noted in its report that confidence of Millennials and Hispanics, in particular, are helping to drive rising overall confidence in the housing market. Confidence in the housing market overall has increased from six months ago, to a headline index of 66.9. An index number over 50 indicates general confidence.
“With their faith in the value of homeownership and their optimism in the market, these groups will play a key role in ensuring the stability of the market as demographics change,” Gudell said. “For example, Millennial households have more confidence in the housing market compared to the general population, and expect home values to appreciate 5 percent annually over the next 10 years.
