By Sam Becker
This article originally appeared on The Cheat Sheet
The era of white picket fences, two-story homes, and garages housing new (or almost new) cars is a thing of the past. It’s the ‘American Dream,’ a concept that has been ingrained deep into the middle class psyche over the past several generations, which more or less means that the United States is founded upon a meritocracy – that hard work and dedication will deliver what you desire. It’s built into the nation’s fabric.
Traditionally, we think of the American Dream as being able to own your own home, start a family, and become self-sufficient or independently wealthy. That may mean starting a business, becoming famous, or any other number of things. It’s a dream; go after whatever your heart desires.
That concept has been shattered over the past decade or two, however. A faltering economy, flat wages, and rising costs of everything from housing to education have left a lot of people high and dry – and unable to get their heads above water, let alone go after their dream.
As a result, younger generations are growing up with a different idea of what the American Dream constitutes. And the results of a new Harris Poll, done in a partnership with ValueInsured (a company that provides down payment insurance for homeowners), has revealed what the ‘Dream’ means in the eyes of younger demographics.
According to that survey, millennials are more cautious about owning a home – once the lynchpin of the American Dream. It’s hard to blame them, after witnessing the foreclosure crisis first-hand. But 90% of respondents did say they hoped to own a home some day. The biggest issue? Saving up enough for a down payment, which is a huge obstacle considering that the average salary for millennials, in 2013, was between $30,000 and $35,000.
On the flip side, younger folks are holding their nomadic lifestyles and the flexibility that renting allows in high importance. With the relative short tenures at jobs and economic conditions that are still wildly unpredictable, younger generations are understandably wary about putting down any roots. It’s hard to tell when they’ll need to relocate for a new job, for example.
“The new American Dream combines the satisfaction of ownership with the flexibility of renting,” said Cleve Bellar, chief marketing officer of ValueInsured. “Unlike their grandparents who bought a home to live in for 40 years, today’s consumers, children of the digital age, expect control over their home. Not the other way around.”
In other words, a lot of people aren’t really buying houses as a place to live – they view them as investments. As we’ve seen over the past several years, they’re investments that are a lot riskier than many people realized. That’s really what’s at the heart of the issue here, for young potential buyers. Not having enough for a down payment is one thing, but losing what could be a year’s worth of wages in some cases is a scary prospect, meaning that many millennials are happy to wait on the sidelines and continue renting.
So, the new American Dream is the ability to rent, and have the ability to dip out on short notice. At least in the eyes of younger generations, flexibility is more important than laying down roots.
Another big finding from the poll is that young Americans would be more willing to buy if they had protection for their down payments. “Almost one-third of millennial renters (30%) lack confidence that they would get back their full down payment if they were to buy a home today and need to sell in the next 2 to 7 years,” a ValueInsured press release said. And, as a result, “69% of millennial renters said they would buy a home sooner if they had ‘down payment protection.'”
These are the same types of protections that banks have, ValueInsured’s CEO Joe Melendez said.
“The banks and financial institutions have always been protected from the risks of a fluctuating market,” said Melendez, via the press release. “We’ve entered a new era when the modern homebuyer will also be protected. That’s consumer empowerment – certainly one of the markers of the new American Dream.”
We could see the mortgage market shift to address these demands, as millennials age and more look to purchase homes. But with a healthy distrust of the system following the Great Recession and housing crisis, it might take a while before they go wild on the market. Still, this is some valuable insight into what’s coursing through the millennial mind – particularly as many remain reluctant or unable to buy homes or start families.