Sep212016

Is the American Dream dead to the Millennial generation?

Do Millennials reject the American dream of home Ownership, or does it reject them?

End-Of-The-American-Dream

When the Baby Boomers and Generation X entered the workforce, their student loan debt was manageable, they found good jobs, and when they wanted to buy a family home, prices were affordable. Those generations assumed it was their birthright to enjoy the American Dream of a stable job and a family home of their own.

For the Millennial Generation, that isn’t their reality.

It’s difficult for the previous generations to imagine borrowing $100,000 or more to obtain a degree only to find that after struggling to graduate that a high-paying job didn’t materialize. Further, the older generations can’t comprehend searching for a house only to find a picked-over entry-level inventory with prices so high that even without the student loan debt, they could never afford to buy.

The grim reality faced by Millennials removes homeownership from consideration. Why should Millennials embrace a dream they see no way of achieving no matter how much they sacrifice?

american_dream

According to Wikipedia:

The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work. In the definition of the American Dream by James Truslow Adams in 1931, “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement” regardless of social class or circumstances of birth.

The idea of the American Dream is rooted in the United States Declaration of Independence which proclaims that “all men are created equal” and that they are “endowed by their Creator with certain inalienable Rights” including “Life, Liberty and the pursuit of Happiness.

For the most part, do those under 35 have any good reason to believe in the American Dream?

Will Millennials be as prosperous as previous generations? Or will they merely slave away to pay the bills of previous generations and bail out their housing mistakes?

Will Millennials enjoy upward social mobility? Or will they be burdened by the excessive debts required to operate the system created to benefit previous generations?

Will they experience a life better and richer and fuller? Or will they be dutiful slaves working to provide creature comforts to the previous generations while getting none of those benefits for themselves?

Will they believe all men are created equal? Or will they believe they are hapless surfs destined to toil endlessly for their superiors in previous generations?

With fewer people buying homes, millennials are redefining the American dream

Nicole Audrey, Saturday, 17 Sep 2016norman_rockwell_mortgaged_children

Home ownership in America is not nearly as common as it was in the past. Census Bureau figures show that in the second quarter of 2016, the home ownership rate dropped to 62.9 percent — the lowest in more than 50 years.

(See: U.S. homeownership rate plummets to five-decade low)

Are we witnessing the death of the American Dream of home ownership and a white picket fence?

Perhaps not. A recent survey showed that even though 62 percent of millennials are renting or living with roommates, almost 90 percent want to be homeowners. …

This is completely meaningless happy talk. True demand is the amount of money those with the desire for housing can raise to put toward the purchase of real estate. If those with the desire for real estate do not have savings and if they cannot qualify for a loan, they create no measurable demand.

The desire for housing will always be high, but demand for housing will be low for many more years.

(See: Most Millennials won’t qualify for a mortgage until 2019, Imprudent student debt debilitates Millennial home shoppers, and Typical sources of housing demand largely absent)

We can infer that a fair amount of people aren’t renting and residing with roommates because that’s their idea of living the American Dream, but because they’re not in a position to buy a home. This makes sense when you consider the onus of student debt, which according to a recent Harvard study, affects 42 percent of millennials between 18 and 29 years old.

“I’d like to (buy a home) somewhere in Massachusetts, but I’ll settle for anywhere that isn’t the deep south or the midwest or L.A,” said Kirstin Kelley, a 25-year-old writer based in Portland, Oregon. “It feels moderately doable, but only if I stick to paying the minimum on my student loans and eventually get them forgiven.”

Kelley and her partner have a total of around $150,000 in student debt, a daunting figure that she says keeps her stuck in “survival mode.” …

pay_our_debtsThe hopelessness of her situation is palpable. Her plan is to wait for student debt forgiveness, and that won’t be forthcoming.

When I was in school, I didn’t party as much as many others, and I worked to support myself. I watched others behave less responsibly, but I wasn’t jealous or upset about what others were doing because I knew the day would come when the bills came due. If I believed my student debts would have been forgiven, It would have changed my attitudes and behaviors. I would have partied like the others, and I would have borrowed all the free money I could get. That’s moral hazard, and it’s why her debt won’t be forgiven.

But without that debt forgiveness, she has little or no hope of owning a house in her working life. Writers don’t make much money, certainly not enough to pay off a $150,000 debt. The hope of debt forgiveness is all she has. Without it, she would have no hope at all.

But while Kelley and other millennials may pine for the security of home ownership, there’s also appreciation for not being tied down to a place.

Millennials appreciate the flexibility of being transient or living in areas with great amenities but a high cost of living, so owning is next to impossible,” said Erin Lowry, ‎founder of Broke Millennial. “People prefer not to get saddled with a mortgage payment if they might move in a few years.”

Are they embracing renting as a lifestyle choice, or is it a necessary evil?

The fact is that while 90% of Millennial renters may aspire to home ownership, only 39% save money to actually achieve that dream. Again, desire is not demand. Until conditions change and Millenials can prepare for home ownership, many will decide to go with the flow and enjoy today.

And why not? Homeownership isn’t an attainable dream.

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