Has the Definition of the American Dream Changed?

Homeownership has been a key piece of the American Dream for the social and economic ideals it represents. But attitudes toward homebuying have shifted. Since the 2008 financial crisis, homeownership rates have dropped to 20-year lows. In their new study, Mark Lindblad and coauthors explore whether the Great Recession and financial crisis are associated with homebuying intentions and purchases, specifically among low-income renters. The authors used pre- and post-crisis panel data from low- and moderate-income renters in the United States from 2004 to 2014 to determine the relationship, also analyzing how homebuying intentions among this population varied by age, race, and ethnicity. Theirs is the first study to use psychological theory to assess homebuying attitudes and purchases before, during, and after the crisis. They found that first-time homebuying intentions decreased across all age groups. Homebuying intentions peaked in 2005 and then declined half a point on a five-point scale through 2014. The authors also found that homebuying norms and favorability are associated with homebuying intentions but not purchases. Finally, the authors found that perceived control over homebuying is associated with both intentions and purchases. This suggests that research connecting attitudes to behavior can reveal a better understanding of housing decisions, which are not as straightforward as they may seem, and that homeownership is a challenging but important goal for many low-income renters.

Key findings

• A half-point decline in homebuying intentions between 2004 and 2014 is associated with a decline in first-time home purchases.
• Renters ages 35 and older at the baseline report the greatest decline in their intent to buy homes.
• Renters ages 18 to 34 report diminished homebuying intentions but expressed the highest overall levels of homebuying intentions pre- and post-crisis.
• African Americans report greater homebuying intentions, though the odds of them purchasing a home are 29 percent lower than whites. This highlights a persistent racial or ethnic disconnect between homebuying intentions and purchases that the authors suggest could result from racial or ethnic differences in the time expected between homebuying intentions and purchases, unequal information about requirements to qualify for a mortgage, and discrimination in homebuying.