Few Believe in the American Dream of Homeownership Anymore

Gallup has been polling Americans for 45 years on their take on the housing market and for the second year in a row a majority think now is a bad time to invest in a home. In fact, the percentage who remain optimistic has dropped to 21%, nine points less than the number a year ago.

Back in 1978 when the question initially was posed for Gallup’s poll, 53% thought it was a good time. Even more or 67% agreed in 1991 when it was asked again, though a recession then loomed as oil prices climbed after Iraq invaded Kuwait, the Federal Reserve attempted to tame inflation and debt from the 1980s accumulated, according to a Federal Reserve Bank of San Francisco report.

Why the Switch Occurred

Prices continued to rise in the early 2000s and lax underwriting made it easy for even poorly-qualified borrowers to get a loan. Eventually it all came crashing down in early 2007, causing many homeowners to default on home loans and become more pessimistic about homeownership. Yet, a majority or between 52% and 58% still thought it a good time to buy in the years from 2006 through 2008.

Optimism soon returned, along with lower home prices and interest rates. By 2009, optimism climbed back to 71%, then hovered in the high 60s and low 70s through 2017, a long stretch of good feelings about housing. But then the pandemic’s toll on the economy felled interest in homeownership, sending it down to 50%, a then-record low. Lower inventory, higher interest rates and bigger mortgage payments have now made housing less affordable, so pessimism has followed. Some believe they may never be able to buy a home, and only half of millennials have attained that milestone, far different than prior generations. 

Local Take

While housing results and overall attitudes have generally become more varied by locality, opinions are now more similar among regions, income, education and party identification, according to the Gallup results.

But the poll still assessed Americans’ views about prices in their area. In 2021, 71% predicted local prices would rise in the coming year, the highest percentage who thought that. In last year’s fourth quarter, they did reach record highs with the median home sales price hitting $479,500. But that now has inched down slightly in this year’s first quarter to $436,800.

There are slight differences in areas, too, about where local home prices are headed. Midwesterners are less likely to believe that prices in their area will increase over the next year; only 45% think so. That contrasts with 55% of Westerners who think so, less than the 61% in the South and 62% in the East who do. Whether respondents reside in a town or rural area also dampens their optimism with only 45% thinking so if living in such locales, compared to 64% in cities and 57% in suburbs.

But Don’t Count Out Homeownership

Despite the rising gloom about homeownership, Americans still consider real estate the best long-term investment over stocks, gold and other options, even if right now more are pessimistic.