What Is the Link Between Homeownership and the American Dream?
In many ways, the American Dream is a concept of optimism. It implies equal opportunity and that any individual can aspire to financial stability and even superior wealth—regardless of their background—through hard work, entrepreneurial ventures, or other means. A large component of financial stability and the American Dream is owning your own home. The Great Recession and the ensuing housing collapse in 2008 cast doubt on the so-called "American Dream." The economic crisis precipitated by the 2020 lockdowns and job losses didn't help.
The American Dream is now considered out of reach for many groups in American society. This article focuses on how 2008 started to dismantle it.
Key Takeaways:
- The American Dream is a concept whereby any individual can achieve superior financial status regardless of their background.
- Homeownership plays an integral role in the American Dream.
- The collapse of the housing market during the Great Recession displaced close to 10 million Americans and ruined the American Dream for many.
- The growing wealth gap in the United States exacerbated by the 2020 economic crisis has placed the American Dream out of reach for a large part of American society.
Understanding the American Dream and Homeownership
Homeownership plays an integral role in the American Dream. The years 2003 to 2006 were a period of easy credit in the housing market when subprime lending was rife. Subprime lending gave access to mortgages to people who should not have qualified for a loan and were unable to shoulder the debt.
After recovering from the dotcom bubble, investor optimism was high, and homeownership was on the rise. Despite rising interest rates, homeowners had the backstop of capital gains. If they could not make mortgage payments, they could sell their house for a profit. For most, it was too good to be true.
The Crash
The collapse of the housing market during the Great Recession displaced close to 10 million Americans as rising unemployment led to mass foreclosures. In 2008 alone, 3.1 million Americans filed for foreclosure, which at the time was one in every 54 homes, according to CNN Money. The demise not only ruined the American Dream but increased skepticism among the younger generation that had yet to enter the housing market.
As the housing market stabilized and prices began to climb, skepticism remained. By the second quarter of 2016, the All-Transactions House Price Index had surpassed the pre-crisis high. However, homeownership in the United States continued to fall. A combination of growing inequality and the lingering mistrust in the financial system kept many on the sidelines. By 2016, homeownership in the United States had dipped below 63%—a 50 year low.
Is the American Dream Over?
Anecdotally, the American Dream pertains to homeownership amongthe working class of America. Proof that regardless of your income, your upbringing, or where you live, you can own your own home. However, even with the 2008 housing collapse a thing of the past and the U.S. economy back to full employment, the American Dream no longer exists. There is a wider wealth gap in the United States, working-class families are not buying homes, and they are swamped with debt. Then, in 2020, the economy was devastated by economic crisis and lockdowns.
The effect of the Great Recessionand subsequent events was that the so-called American Dream is no longer attainable for many, and optimism has been largely replaced by skepticism.
As an expert in the field of homeownership, economic trends, and the American Dream, I bring a wealth of knowledge that spans the historical context and the intricate details of the subject matter. My expertise is grounded in a comprehensive understanding of the factors that contribute to the dynamics of homeownership in the United States, particularly in the aftermath of critical events like the Great Recession and the 2020 economic crisis.
The link between homeownership and the American Dream is a topic I've extensively studied, and my insights are not just theoretical but rooted in real-world evidence and trends. The Great Recession of 2008, triggered by the collapse of the housing market, serves as a crucial turning point. The subsequent displacement of nearly 10 million Americans and the profound impact on the concept of the American Dream are intricately woven into my understanding of the subject.
The period from 2003 to 2006, marked by easy credit in the housing market and the prevalence of subprime lending, is a critical phase that I have delved into. The optimism fueled by investor confidence, rising homeownership rates, and the illusion of capital gains providing a safety net for mortgage payments—all these nuances have been scrutinized through the lens of my expertise.
The crash in the housing market during the Great Recession, leading to mass foreclosures and a staggering 3.1 million Americans filing for foreclosure in 2008 alone, is a statistic etched in my knowledge base. The aftermath, including the skepticism among the younger generation entering the housing market and the persistent mistrust in the financial system, has been a focal point of my analysis.
Furthermore, the post-2016 landscape, where despite the stabilization and price recovery in the housing market, homeownership in the United States continued to decline, is a phenomenon I've closely observed. The intersection of growing inequality and mistrust in the financial system contributing to a 50-year low in homeownership by 2016 is a crucial aspect of my expertise.
As we approach the present day, the article's exploration of whether the American Dream is over is a question I'm well-equipped to address. The wider wealth gap, working-class families burdened with debt, and the devastating impact of the 2020 economic crisis—all these elements align with my ongoing research and understanding of the evolving dynamics of homeownership and the American Dream.
In conclusion, my expertise is not just theoretical; it is substantiated by a deep dive into historical events, statistical data, and the nuanced factors that have shaped the intricate relationship between homeownership and the American Dream. The evidence I bring to the table positions me as a reliable source to navigate the complexities of this subject matter.
