From the earliest days in our country, owning your own home has been a goal of almost every American or at least it seems that way. From the time that the first settlers landed at Plymouth Rock in 1620, setting up and having your very own place to live was something that each family did and they focused all their attention on it. Of course, they had to build that shelter back then, unlike today when we can just look around the part of the country we want to live in and pick a house from the neighborhoods we like and can afford. Many of us have done just that, more than once, myself included. It’s the biggest most expensive thing you can ever buy. But, is it still what everyone wants today? Has the American dream of home ownership started to slip away?
My First Home
I bought my first home, a brand new 2 story colonial with 4 bedrooms and 2½ baths back in 1976 at the age of 26. I had always known that I wanted a house. After 3 years of marriage and cramming into a 1 bedroom apartment, we decided we could find that dream house if we just moved south of where we were and just a little further away from our jobs. We thought we were well planned in our strategy, we both had jobs, and we were young and “upwardly mobile”. We had saved $10,000 in three and a half years of marriage and we wanted a bigger place to begin raising our family-to-be. Sounds like the script to an American classic movie, doesn’t it?
Based on our limited knowledge of the entire scenario, we decided to look in a part of central NJ where new houses were springing up all over the place and the housing market was booming. Houses were going in some areas for about $30-$50,000 base prices depending on bedrooms, baths, square footage, and lot sizes. We figured that we could afford that and the mortgages rates were about 9%.
Checklist for Success
We followed what I call the standard checklist that is still what a lot of people do today, some 40 years later and that is:
- Get all our supporting documents together like tax returns, W-2’s, paystubs, and such to have at the ready to show the banks and mortgage companies that we could afford a home of our own.
- Checked the Sunday papers for home ads and contacted a realtor to help us find properties that we might be interested in looking at.
- Ran a check of our credit report to make sure it was correct and our scores were at good numbers (I’ve almost always had excellent credit since I started working).
- Had my down payment money ready to go when we found the right place to buy.
- Built up a cushion of 6 months’ funds to handle any maintenance repairs, construction, or emergency issues for our new place.
- Test drove the routes we would need to take from central NJ to our employers as well as the train and bus availability.
- Tried to time our apartment lease renewal and home search so as not to be “homeless” or have two places of our own without being ready to move.
- Started spending every weekend looking at homes and models.
The process didn’t take that long, about 3 months, and of course we decided on a place that was just at the top of the chart of what we could really afford. We had to put all of the funds we had saved as a deposit to avoid PMI (private mortgage insurance) so we could save money and not have to escrow our taxes in advance of the due dates.
Being a Homeowner
The move went smoothly and it was about 3 months later, after setting up our new place that I began to realize that I would be in debt for at least 30 years (until after the turn of the century). I had become a slave to the ¼ acre that I now called my very own. I had done it, got a piece of the pie, my very own home.
Now let me quickly add that I have had 4 of my own “homes” over the past 40 years and each time I made a change, there was a good reason to do so. But even though I changed my home, the feeling never changed. I was proud and felt that I wanted, no, needed a home of my own. I didn’t like renting for lots of reasons, like having no equity, not being able to make it really mine with alterations, etc. Not having the roominess, and a biggie, with my own home I had my very own grass lawn and vegetable garden. I do have to admit though, that after I turned 45 or so, the thrill of cutting and maintaining the lawn and vegetables did wear off. That’s when hiring someone to do that becomes a big deal.
So a big yes to all the cliché’s about owning your own home. Except for one thing that happened. It was the year 2008 and the housing market collapsed.
The Tide Turns
When the housing market slammed millions of people and their sub-prime mortgages, that’s when the American Dream suffered a massive coronary. People had blindly and recklessly “bought homes as a great investment opportunity” and believed in the out of control appreciation that houses had enjoyed for years and years. Suddenly they found out that that the bubble had burst. With the bursting came a mess of homes going underwater that even today, almost 10 years later, haven’t recovered. The home values are still down from what they were and people still have negative equity and foreclosures continue. Home buying has become much less attractive that it ever has been. And that is why I raise this next question.
Is the American Dream Dead?
My research tells me that for our next generation, the desire for home ownership has either declined or at best been postponed. Millennials seem to have a totally different idea and expectation then that of their parents and grandparents had about life and lifestyles. They are more transient and plan on that to fit their job and lifestyle. They are more comfortable with the idea of apartment dwelling and seem to prefer the city and its excitement and convenience to culture and entertainment than to the open space and “ponderosa” of suburbia. At least for now they do. They are experiencing delayed marriages and families as the birth rate, the number of children they have and will have, is declining.
I’m guessing that money is involved, and is a great part of the decision to postpone ownership, family, and part of what was the historic core of American values. For many, career and job opportunities have slowed down over the past decade. Salaries have been stagnant. Layoffs, unemployment, and the jobs exiting our system to overseas are serious problems. College has become a virtual necessity and post graduate degrees almost as much of one. The costs for that and the loans involved are enough to make anyone cringe and thinking about taking on another huge debt at any age is dangerous. Despite an inner desire to someday own a home, the current situation doesn’t look like it will change anytime soon.
Perhaps home ownership just doesn’t fit in to the 21st century. It may be that the money that went into owning a home and building equity has evolved into a new type of building personal wealth through saving money, side hustles, alternative streams of revenue and even investing in other types of equities to a much greater degree. The education that the next generation is getting and the financial responsibility they are learning can replace the 30 year endeavor to build one’s wealth with long term property investments. But will it prevent the feelings and emotions that pride of ownership brings?
Do you wonder if we may have seen the end of this American dream? Do you think that it may be just a blip on the radar screen and it may come back full circle? Is it even important at all? Can you feel financially fulfilled and experience financial health and wellness without having equity in your home and the pride of homeownership?