Many young families these days have a slew of financial challenges that has made the goal of owning a home seem further and further out of reach.
Even with reasonable salaries, putting some cash aside each month to buy a home can prove difficult. Tight credit requirements to obtain the necessary financing have not helped.
For young couples, it's tough with credit and trying to save up for a down payment. For now, many young couples are putting the hope for purchasing a house aside.
The American dream of owning a home is slowly fading across the country, as a growing demographic of young families opts to rent either out of necessity or by choice to avoid the headache of a mortgage.
The generation has seen real estate values climb to historic heights in 2006, and then swiftly crumble two years later, sending shock waves through the economy.
And with an increasing number of couples now postponing marriage until their 30s, buying a home has become less of a priority.
"The real estate industry wants us to think the American dream starts with homeownership, and the baby boomers bought into that," said a real estate author and chief executive of a financial services firm.
"But the reality is that owning a home is not the American dream. It is just $400,000 worth of debt. Now we're seeing the repercussions from it."
A growing trend
The rate of homeownership among Americans has slowly declined since the onset of the Great Recession, slipping to 65% in the first quarter — the lowest ratio since 1995.
There has been a consistent drop from the peak of 69.2% during the housing boom of 2004 and 2005. But the current rate also is lower than during the trough of the foreclosure crisis in 2008 and during both recessions of the past two decades.
Homeownership is dwindling faster than in the United States as a whole.
Many in the housing industry say people will always buy residential real estate if the return compares favorably with other financial investments, such as stocks and bonds.
But recent troubles in the real estate market, and new increases in home prices that stir fears of another bubble, have fewer potential buyers willing to take on the risk.
The slide has been especially prevalent among young families and consumers aged 35 to 44. That is the sharpest fall of any demographic.
Those under 35 are not buying homes either, as growing student debt holds those back who otherwise would have considered buying a home.
In a healthy economy, these younger consumers typically represent first-time homeowners and move-up buyers, two key components of a housing market's long-term stability.
Since last year, sales to first-time homeowners nationwide slipped 25%, according to economic research from Peak Prosperity.
Many potential buyers also have been hindered by stringent financing requirements, which have made it difficult for the average young family to qualify for a mortgage.
A shrinking supply of homes for sale and rising prices also have made it more strenuous for would-be buyers to find their dream home. Realtors say some have just given up.
For more information on renting an apartment in Raleigh, NC, contact Auston Grove.
Excerpts – Herald Tribune