The Rise and Fall of the American Dream And What It’s Doing to the Housing Market
For many, many years, most Americans only had one goal in mind — and that was to have a good career, a happy marriage, kids, and a beautiful home in the suburbs. In those years, most people who worked hard enough were able to achieve that, and at a fairly reasonable price. Fast forward a couple of decades, and things have changed dramatically. The American Dream is no longer what it used to be, and it shows in the numbers. And, because this dream was once focused heavily on owning a family-home, this aspirational shift is unequivocally affecting the housing market long term.
The Overwhelming Decline in Birth Rates
These days, people are choosing to have children later in life, or not at all. According to the CDC, the U.S. fertility rate is lower than ever, recording 62 births on average out of every 1,000 women of childbearing age. This is, of course, no surprise. Young people are not in a rush to have children as they were a few decades ago, and it’s primarily due to money and personal freedom. Burdened by debts like student loans, young people as well as those in their 30s and 40s, have more reasons to not have children than to have them. While there are still plenty of people dreaming of the white picket fence and children running around, statistics show that the American Dream, in terms of having children, is not at all where it used to be.
People Aren’t Getting Married, Either
In general, most people get married and then have children. Of course, this hasn’t been the case for quite a long time, yet marriage was still one of those things that somewhat defined the American Dream. In addition to a decline in birthrates, however, there has also been a decline in marriage numbers in the United States. Today, less than 50% of Americans are getting married (or staying married, for that matter), which no doubt affects the housing market as well.
People can still buy homes without being married, and they very well do. However, this idea that when you get married, you move into a home, and you save on taxes because of all of these factors, is no longer the same. There may not always be a direct correlation, but people getting married less and having children less are likely not considering buying a fancy home in the suburb. A home is a big investment, too, and it has always made sense for that investment to be made with two people combining their income. Additionally, for unmarried couples looking to buy a home, they will find that the process is a bit more difficult and not really catered to them.
Take Travel into Consideration
There’s another reason why Americans aren’t having children, getting married, or buying homes. As of 2017, more than 38 million Americans traveled overseas, more than any other year to date. More and more people are choosing to spend their money on travel, instead of buckling down in a career and saving for a home with a spouse they don’t have and children they don’t want. As travel is more affordable and more accessible than ever before, people strongly feel that being tied down by things like a mortgage is not conducive to their long-term plans. Not only that, but those who travel for many years and then come back to live in the United States, may find it hard to get back into the swing of things as far as a career, relationships, or even choosing what city to live in. And, as we all know, since one of the biggest things that lenders look at is consistent proof of income, rental history, and credit in the United States, those will the travel bug might avoid living out the American Dream altogether.
Baby Boomers are Suffering
All of these factors combined is just the tip of the iceberg when it comes to the rise and fall of the American dream and how it’s impacting real estate. There are many other problems lying beneath the surface, a kind of ripple effect that we’re only just seeing the start of. The thing is, when the baby boomers bought their homes when they became parents 50 years ago, they likely assumed that the American Dream wouldn’t change much; that their children, and their children’s children, would follow in their footsteps, and buy a fitting home just as they did.
But, with families having less children today, the need for buying a home to support a large family is dwindling. Think about it. If your grandparents are still alive, do they live in the suburbs in the same house they bought half a century ago?
In the 60s and 70s, the baby boomer generation were buying homes left and right, and those homes were typically located in the suburbs and had quite a number of bedrooms and bathrooms. People bought homes in the suburbs as a part of the life cycle that American culture set out for them. But now, people have options. Without children, it’s like the glass is finally clear. People can essentially do anything and everything besides what adults their age did a few generations ago.
Unfortunately, your grandparents who want to sell their home and maybe move to that beach condo they’ve always been dreaming of, aren’t feeling like they can afford to do so. After all, with less people showing interest in buying their “perfect family home,” they’re going to have a much harder time getting their money’s worth if they decide to sell. And, if those homes don’t sell, what’s going to happen to the housing market?
Will the suburbs die out? Will the bubble burst? Will cities continue to get overpopulated? And, will the American Dream as we know it forever be a memory?