DREAM VS REALITY

Americans decide what makes up the American Dream

Hope for a better future built on today's achievements is contained in the American Dream. These aspirations are based on working toward realistic goals made up of components that change with time and innovation. Having a home of your own has been a primary factor in building this dream since World War II – implicitly contributing to rising values during many of those decades. This may be on the cusp of change; if so, don't count on value measures of the past to hold into the future.

Baby boomers, the dominant homeowning segment of American society, grew up with a vision of the American Dream starting with a good job and marriage, expanding by buying a home and building a family, with moves up the career ladder financing bigger homes filled with nicer furnishings along with the occasional family vacation splurge and later college education for their next generation. Children became adults and moved. Career growth is ebbing as retirement beckons. Maintaining a homeownership rate of almost 80%, they hang onto the houses that remain the primary element of their American Dream.

Boomers passed their vision on to Generation X, who keep a homeownership percentage slightly above 70%. Growing up as latchkey kids during a time when divorce became more common, the meaning of family within the American Dream took less attention than jobs with promotion potential, providing income to cover the cost of duties previously handled by family members. They juggled their early careers and finances through the Great Recession, learned to manage life and family within an internet-driven world that allows greater mobility and flexibility, then experienced hefty post-COVID real estate gains.

Since the 2020-2022 jump, a growing repair, insurance and maintenance (RIM) obligation matches price increases. Older Baby boomers may choose to defer some costs but younger owners need to invest in their primary asset. While they hold onto the American Dream of their parents, it hasn't worked as well for them.

As Millennials moved out of their parents' homes, they found an appreciating real estate market that put homeownership out of reach for many; slightly over half live in a home they purchased. They entered adulthood when society had become accustomed to cohabitation without marriage; only 44% are married and they made that decision at a later age. So, more resources and efforts are directed to other goals like individual aspiration for personal freedom either in the present, choosing jobs for personal fulfillment along with income potential, or for retirement on their terms. Starting a business or seeking more flexible work environments may take precedence over trading up to a nicer house. Instead of being a primary expression of achievements, a home purchase may be part of building a savings buffer to finance that future retirement, making money issues and RIM costs key factors.

Zoomers will re-evaluate the Dream's components. Not yet convinced that AI will open opportunities that balance the job losses in the news, uncertain career prospects fuel the reach for professional independence started by Millennials. The oldest Zoomers, now 29, are pushing marriage and family plans into their 30s. Their ideal financial foundation still includes homeownership but seems out of reach for too many; young voters rank housing unaffordability as their top political issue. Options must change to fill that affordability gap. The recently-enacted ROAD to Housing Act looks to expanded multifamily inventory and eased zoning requirements to open new approaches to homeownership. For example, changes that allow tiny homes, including less costly manufactured units, adjacent to a single family house offer the possibility of either multigenerational living on a single property or generating rental income to make homes affordable again.

Alphonse Karr told us (in French), "The more things change, the more they stay the same." Count on the American Dream surviving but the road traveled to get there is being redefined.