Trulia’s end-of-year survey shows that the idea of homeownership is part of the American dream is shrinking most among younger adults and the group's pessimism about home buying is increasing.
While the share of Americans that say homeownership is, in fact, part of the American dream increased from 72% to 73%, those aged 18 to 34 beg to differ.
In this age group, just 71% of younger adults said buying a home was a part of the American dream, according to the survey. This is a significant drop from 2015, when 80% said homeownership was an important part of the equation.
“Last year marked a break from the unrelenting and accelerating home price growth that characterized the market for several years straight – growth fueled by high demand, limited inventory and cheap financing,” Trulia Senior Economist Cheryl Young said.
“But while that break may ultimately prove beneficial to some, the shifting dynamics seem to be giving many buyers, sellers and renters pause as we enter a new year: Younger would-be buyers are more pessimistic on the value of homeownership; financial obstacles are proving stubborn to overcome; and sellers are less bullish," Young concluded.
The report explained that pessimism from young adults can be attributed to financial concerns, as 30% cited not having a job was a burden, followed by 26% that said student debt was an obstacle to homeownership.
Although financial woes appear to be a large deterrence for young adults, Trulia highlights this issue impacts every age group.
In fact, 95% of U.S. renters wanting to enter the housing market said financial concerns were a barrier to homeownership. Of these renters, 53% said saving enough for a down payment was a hurdle, followed by 33% that cited bad credit and 29% that said qualifying for a mortgage was a hindrance.
To make matters worse, Trulia notes that continual home price growth is also frustrating potential homebuyers. According to their analysis, 36% of renters who want to purchase a home said one of their biggest obstacles was rising prices.
Additionally, mortgage interest rates have impacted potential buyers, as 19% of renters cited rising mortgage rates as one of their biggest hurdles to owning a home. This is a 6% increase from spring 2017 when the percentage sat at 13%.
ATTOM Data Solutions’ latest Home Affordability report showed that the index fell to 91 in the fourth quarter of 2018, marking the least affordable level since the third quarter of 2008 when affordability fell to 87.
This lack of affordability has contributed to a slowdown in the housing market, and Trulia’s data indicates that sellers are becoming less than optimistic.
“With slowing home price appreciation, Americans appear to be more circumspect about the benefits of selling this coming year," Trulia writes. "More continue to think this year will be a better year to sell than 2018 was, but the gap between those thinking next year will be better and those thinking it will be worse has significantly narrowed.”