Homeownership and the American Dream

By: Jill Mizell

March 30, 2011

The role of homeownership continues to be at the heart of the American Dream and the pathway to the middle class, providing much-needed personal and financial stability for families.  But the crippled mortgage market and foreclosure crisis have endangered this integral avenue to opportunity, and seven in ten Americans now believe access to mortgages is a serious problem. Most Americans hold financial institutions responsible for the crisis, and back increased government involvement in regulation.  Misperceptions exist, however, on how much the government has done to help individuals achieve homeownership.

The American Dream and Homeownership

The latest Heartland Monitor poll finds that owning your own home is an essential element to the American Dream.  In this survey, the American Dream was described as “the opportunity to go as far as your talents and hard work will take you and to live better than your parents” and shows that Americans are optimists when it comes to upward mobility: three in five believe they are living the American Dream, and three quarters believe the American Dream is achievable for people like them.  This is consistent with findings from a recent report by The Opportunity Agenda, “Economic Recovery and Equal Opportunity in the Public Discourse.”  Most Americans want and feel they may be able to reach the dream in their lifetimes, though Americans are concerned that the American Dream, as they understand it, is in danger of slipping away. 

As a goal or aspiration relating to the American Dream, according to the Heartland poll, owning your own home averaged a score of 8.3 on a scale of zero through 10, where 10 means it is definitely part of the American Dream.  Homeownership was outranked only by raising a family and making sure they have more opportunity than you did (mean score of 8.5), and was followed closely by the chance to pursue a rewarding career (mean score of 8.2).  Four in five renters say it is important (57% say VERY important) for them to buy a home one day.  Achievability surfaces as an issue: while 80% of all respondents provided a score of 7-10 for the importance of homeownership to the American dream, the number dropped when the question shifted to the achievability of homeownership.  


Data from Allstate National Journal Heartland Poll VIII

Barriers are an issue, and a large majority (70.6%) believe access to affordable mortgages is a serious problem, with a plurality (32.3%) asserting that understanding the mortgage process is the most challenging aspect of attaining a mortgage, according to a recent survey conducted by GfK for MortgageMatch.com (information can be found at GfK and Move, Inc.).  

Reasons Driving the Desire for Homeownership

Personal as well as financial reasons drive the desire to own homes.  The top reasons to own a home, according to the Heartland poll, are having a place to raise a family (40%), followed by building equity rather than paying rent (25%).  When provided with one of two options, a majority of homeowners (60%) said they see homeownership as a chance to settle in to one home for the rest of their life, and 36% see it as an opportunity to build equity and eventually purchase a different home. Homeownership imbues status, however, as 60% agree with the idea that home owners are more financially successful than those who do not own.  

Homeownership plays a unique roll among racial and ethnic minorities, according to the recent report by The Opportunity Agenda on the economic recovery.   The meta-analysis of public opinion finds that African-Americans, Latinos, other nonwhites, and recent immigrants define the American Dream mostly in terms of concrete indicators of or means of achieving economic well-being, citing home ownership, a good job, and wealth itself as important components of the dream.

African-Americans and Latinos tend to be more optimistic about the economy, personal finances and homeownership.  The most recent National Housing Survey conducted for Fannie Mae in the fourth quarter of 2010 finds that:

  • 51% of African-Americans, compared to 33% of Latinos and 29% of the general population feel the economy is on the right track
  • 67% of African-Americans, 59% of Latinos and 40% of the general population expect that their financial situation will get somewhat or much better in the next year
  • 35% of African-Americans, 34% of Latinos and 23% of the general population say that it is likely they will buy a house in the next three years
  • the percentage of African-Americans and Latinos saying they will buy a house in the next three years has declined by 19% since June, from 43% to 35% for African-Americans, and from 42% to 34% for Latinos 

The following chart, reflecting questions from the National Housing Survey, speaks to the particular importance of homeownership as a provider of mobility and security, especially for African-Americans and Latinos:


Data from the National Housing Survey

Homeownership also plays a unique role for young people, according to the most recent National Housing Survey conducted for Fannie Mae.  Although homeownership rates have fallen among 18 to 34 year olds, a majority (61%) believes purchasing a home is a safe investment, although this is slightly less than other generations.  This age group assigns modestly greater importance to the impact of homeownership on their status in society, on a place to raise a family, and the potential to accumulate wealth through ownership.  Eighteen to 34 year olds are the most likely group (59%) to agree that a home is an investment with a lot of potential, compared to 50% of 35 to 45 year olds, 56% of 46 to 64 year olds, and 46% of those 65 and older.

Fear of Foreclosure

Although fewer are living in fear of losing their homes, it remains a valid concern for a substantial share of the population. Just over half of respondents to a survey commissioned by Move, Inc. in March 2009 expressed fear that they or someone they know could face foreclosure in the following six to 12 months.  The number of Americans expressing individual fear over foreclosure may have gone down since, according to a CBS poll conducted in October 2010.  The question is slightly different, but approximately a quarter (27%) of respondents to the CBS survey are very or somewhat concerned that they will lose their home to eviction or foreclosure in the next 12 months.  Independents (33%) are the most likely group to be very or somewhat concerned about losing their homes, compared to 26% of Republicans and 24% of Democrats.

One in four are worried about foreclosure, according to the CBS survey, but more than half are concerned about not having enough money to pay rent or mortgage, according to a Washington Post poll from the same time.  Concerns about housing payments jumped from 37% in December of 2008 to 46% in February of 2009, climbing to 53% in October 2010, despite modest improvements in the economy, perhaps indicating the longer-term ramifications of the Great Recession. Further, African-Americans (75%) and respondents with incomes less than $30,000 (72%) are significantly more likely than the general population (53%) to be concerned about making mortgage payments.

Dubious Practices in the Lending Market

Lenders have contributed to the air of distrust and insecurity through questionable actions and practices.  According to the most recent GfK/MortgageMatch survey, a tenth of borrowers surveyed reported that their lender gave them a higher interest rate than originally quoted (10.8% of buyers agreed) and that their lender asked for what they felt to be inappropriate information (9.1% of buyers agreed).  Complicating the mortgage application process further, 23% of buyers report that their lender kept changing documentation requirements and 22% remarked that their lender used too many technical terms.

First-time buyers are a key demographic, as 58% of respondents planning to buy a home in the next three years fall in this category.  This is notable because first-time buyers drive the real-estate economy but are more susceptible to unfair lending practices, according to the Move, Inc. news release.  This is an increase over 2010, when 51% of respondents planned on purchasing a home in the near future were first-time buyers, and 48% in 2009, yielding a 21% increase between 2009 and 2011.

Home Values and Underwater Mortgages

The survey commissioned by Move, Inc. in April 2010 also found that half of homeowners – and two in three homeowners between the ages of 25 and 34 – would buy another home today if they could sell their current house for its original value or more.  The most commonly cited reason for selling one home with the intention of purchasing another is out of need to lower monthly expenses due to difficult economic times (25%).  Many are making deep personal sacrifices due to financial constraints.  For those who have delayed selling their home, 69% have reduced daily living expenses in order to meet mortgage payments.  Thirty-five percent of homeowners managed to downsize to smaller homes, and a third of homeowners have postponed plans to expand their family. High monthly mortgage payments (21%) and the risk of devaluing home prices (21%) were driving reasons NOT to own a home, according to the Heartland Monitor poll.

Views of homeownership as a safe investment declined 19 points since 2003, with 64% of Americans in agreement with this statement in 2010, according to the National Housing Survey.  


There are many variables in play, and numerous parties to which blame for the foreclosure crisis can be attributed.  A Washington Post survey finds that a quarter of Americans feel that homeowners are exclusively to blame, while just short of half  point the finger at mortgage lenders and one in five blame both equally.  The recent Heartland poll shows that a majority (52%) blame banks and lending institutions for misleading borrowers and approving bad loans and a third (32%) blame people who took out mortgages they couldn’t afford.  A minority (12%) blame government policies that encouraged too many people to try to own a home.  A plurality (35%) believe that government policies since the housing crisis have limited the extent of the housing crisis, while 32% believe they made the crisis worse, and 26% believe they had little impact.

Perhaps some just don’t realize the especially harsh impact of the economic recession for those who are behind on their mortgage payments.  “Delinquent borrowers” are defined in the National Housing Survey as borrowers who have not made a payment on their mortgage for more than 60 days.  The poll finds that 60% of the general population says their monthly income has not changed, while 47% of “delinquent borrowers” report that their incomes have declined significantly.  Expenses have increased more for folks who are behind on their mortgage payments, as 44% say their monthly household expenses have increased significantly, compared to 34% of the general population.  Forty-four percent of “delinquent borrowers” would rent if they were going to move, compared to 20% of homeowners.  Finally, 44% of respondents behind on the mortgage payments by 60 or more days report that their mortgages are “under water,” meaning they owe at least 5% more on their mortgage than their home is currently worth.  Despite it all, half of respondents behind on their payments believe their financial situation will get better in a year, showing more optimistic than the general public (40%).

Solutions and Government Policies

Regarding the government’s role generally, a majority (62%) thinks that the government has a role in confronting today’s economic problems, and there is greater support for the government’s regulating major financial institutions, as reported in the economic recovery report by The Opportunity Agenda.  Further, the idea that the government should do more to solve problems and help meet the needs of people is more popular with African-Americans and Hispanics.  Americans question the government’s efficiency rather than its intentions, since a large majority feels the government has the nation’s best interests in mind all or some of the time.  Coupled with this mind-set is Americans’ elevation of personal responsibility and confusion around structural obstacles, such as modern bias and institutional discrimination.  A majority thinks that economic mobility is mostly dependent on personal attributes such as hard work (71%) rather than external conditions (20%). On the other hand, when thinking about downward economic mobility or poverty, Americans are split on whether outside circumstances or lack of effort is responsible (48% to 48%).

Relating specifically to homeownership, providing foreclosure relief to help individuals keep their homes (16%) was outranked only by cutting taxes for the middle class (37%) and making college more affordable (22%) when examined as possible actions the government could take to immediately help respondents with their own financial situation, according to a Democracy Corps/ Women’s voices. Women Vote survey conducted last year. 

Rifts emerge among those who are struggling financially and those who aren’t on proposals supporting assistance for folks who are under water with their mortgages, according to a recent report by the Public Agenda on the economy and the American Dream.  Three in ten respondents who are struggling believe providing financial assistance to people who owe more on their mortgage than their home is worth is a very effective way to lend a hand to those who are hard-hit in the current economy.  An equal percentage of respondent who are not struggling at all believe this proposal is not at all effective.  The differences between the two groups may stem from the finding that those who are not struggling at all do not perceive foreclosures as being a threat to themselves – a whopping 96% in this category report no problems paying mortgage or rent, and 92% have not had to change their housing situation due to financial pressure.  Subsidizing affordable housing enjoys a little more support than assisting underwater borrowers, among all groups, as seen in the chart below.  


Data from the Public Agenda.

There was much support for and salience around the idea of imposing a time period during which banks could not foreclose on delinquent mortgages, according to a poll conducted for the Washington Post this past October.  Half of respondents believed this was something the Obama administration should do, with 29% feeling this way strongly.  Only 13% believed strongly that this is something the administration should not do.  Despite public support, this idea lost momentum after the administration opposed the idea of a national freeze on foreclosures.

The American public may be unclear about the role of government in making homeownership affordable for them.  Three quarters of homeowners surveyed in the Heartland Monitor poll felt that they have not benefitted from any federal government policy to promote home ownership, yet 80% of mortgage holders reported that they took the home mortgage interest tax deduction.  This disconnect in perception versus reality may be a driving reason behind the split – 46% to 46% - on whether or not the government should continue its level of funding for programs that encourage home ownership.