America is changing the way it lives. Owning one's home has always been considered a significant part of the modern American dream — it meant pride and security, control, stability and goodbye to landlords.
It still does, but times change and there are signs that the dream of owning a home may be changing as well.
The Great Recession, which began in late 2007 and lasted for nearly two years, is still having an impact on the U.S. housing market. Since the bottom dropped out a decade ago, "new home starts" — used to describe when construction begins on a new home — have been sluggish.
That was until October, when they hit a nine-year high, then dropped in November, suggesting Americans are confused about where and how they want to live.
This housing bubble was a main cause of the Great Recession.
For potential homebuyers, it has become a lot harder to get the credit necessary to buy a house. Plus, there's more paperwork when consumers do qualify.
That leads to a depressed market. Another issue: a lack of inventory.
Diploma vs. mortgage
Lurking in the background of less new construction is the renting vs. buying issue.
Renting is becoming increasingly attractive because many people just don't have the money to buy.
There's not enough income to allow people to get into housing.
Zillow predicts that millennials will eventually be in a financial position to buy, and will boost home ownership. At the same time, Zillow says, renting will become more affordable as incomes rise and growth in rents slows.
One of the biggest reasons that young Americans are waiting to buy their first home is student debt. Millennials, who used to be considered the prime homebuying age, are carrying an estimated $1 trillion in student loan.
The problem is, the kids are coming out of school with a tremendous amount of student loan debt. It's like a drag on their finances. Student loans is money that could be going toward the mortgage. I think it's kind of delaying the process.
The under-35 generation are buying nice cars, they're going out to dinner, and they're staying in apartments. And they're moving around a lot more with their jobs. They are a lot more mobile.
A cautious market
Ten years ago, the national percentage of households renting was about 30 percent; today, it's about 37 percent. Each percentage point nationally is about 1 million households.
Rentals are also attractive because renters are spared the worry of potentially plummeting home values.
We ought to be making rental housing much more respectable, whether in urban or suburban areas. Our whole society ought to get away from the fixation of ownership as the only way to go. It's not the only way to go. Ownership is not for everybody; it takes a certain income, budgetary discipline and a steady income.
Many Americans learned from the recession that investing in home ownership is not a sure way to build wealth.