The majority of Americans still value homeownership, but millennials face major challenges in realizing this dream, nearly a decade after the subprime crisis.
Homeownership in America has taken a beating in the past few years. Eight years after the subprime crisis, homeownership remains at its lowest level in 20 years, at just over 63 percent. Does this mean the end of the American Dream of owning a home?
At first glance, the answer is no. New research from ReportLinker shows that for 80 percent of Americans homeownership remains the best investment a person can make.
According to the same survey, owning a home is still the number-one, long-term financial priority for nearly 43 percent of Americans, ahead of ensuring a comfortable retirement, paying for their children’s education and leaving an inheritance.
2015 report by Gallup corroborates these figures, showing that real estate leads four others choices as the best long term investment.
Slow to leave home
The problem may stem from the reluctance of young Americans to form a household, one of the main drivers of homeownership. During these economic hard times, the share of U.S. households with more than three generations under the same roof rose significantly, and has remained high. According to the U.S. Census Bureau’s Housing Vacancy Survey, growth in the number of household averaged just 625,000 annually in 2007-2013, compared to 1.5 million in 2015. But does the fact that this decline persists at a time when mortgage rates are at their lowest in 40 years indicate a change in the way Americans view home ownership?
But the picture becomes more nuanced when one looks at the importance that Americans assign to homeownership. For the general population, it is ranked in third place behind getting married and achieving educational aims in terms of life achievements in the ReportLinker’s survey. This may indicate a disconnect between the dream of owning a home and the reality of achieving it.
Millennial paradox
A closer look at the numbers shows that this disconnect is felt hardest among millennials. The slowdown in homeownership over the past several years has corresponded with the coming of age of the millennials (born 1985-2004). Compared to the general population, only 44 percent of millennials agree that homeownership is the best long-term investment, according to the recent ReportLinker research.
This reticence is echoed in other research, which shows that, although the millennials are the largest generation in U.S. history, they have been slow to form households, a key indicator of future homeownership. Over the past 10 years, the number of adults under age 30 has increased by roughly 5 million but the number of households formed in that age group has risen by just 200,000.
Moreover, homeownership has slipped to fourth place in the list of life …read more
From:: Finance and Economy