Introduction
The American Dream is a very comprehensive thought, embedded with a various set of ideas. It emphasizes on equal opportunity, liberty, the rule of law and a system that facilitates financial progress. With the time, the concept has slightly evolved and became more political and less religious. The concept of prosperity and success are of extreme importance, and they resonate well with Millennials. These two terms are interconnected and political and economic environments strongly influence them. It implies that when political and economic conditions are exceptional (positively), it creates more opportunities for individuals, which allow meeting their objectives, of various sorts and natures that include owning a house (Amadeo, 2017).
Owning a house has been a sort of subcomponent of the American dream. A small but important part of that dream that motivates individuals’ is to strive and invest their energies to meet this objective. It must be acknowledged that in every phase (political-economic-social), there have been different pursuits, on a societal level, which gave direction to economic, political, and social evolution. However, from the systematic study of American history, we learn that prosperity, success, and owning a home have always been part of various interpretations of the American dream.
The Great Recession, which was caused by the subprime mortgage crisis, not only impacted the economic structure, but in many ways, it impacted the collective American psyche, consumption pattern, and social-economic priorities. On these grounds, economists intend to learn whether Great Recession has changed priorities and preferences, of social-economic nature, of Millennials (Crudele, 2017).
Great Recession
As mentioned earlier that Great Recession was the result of sub-prime mortgages, however, in simple terms it can be defined as poor loans issued by the American Financial sector for investment in Real Estate Sector (Akinbami, Michie, & Hollow, 2016). This poor investment, on such large scale, disturbed economy to the extent that it started Recession, which with time grew stronger begun to affect various sectors of the economy. This recession forced Millennials to change their economic priorities and invest in such economic/financial projects that are safe and ensure healthy and stable returns. Also, as per some assumptions, it pushed Millennials to avoid real estate sector for investment. It has also presumably slowed growth in the financial sector. Therefore, it is essential to address the pros and cons of not investing in housing and real estate sector. Also, it must also be discussed what are the pros and cons of owning a home for a millennial (InCharge, 2016).
Pros and Factors Could Increase or Decrease Homeownership among the Generation
There are various kinds of advantages owning a home, which we will discuss one by one and in great detail.
- Greater Privacy: Privacy is one of the subjects regarding which people are mostly very sensitive. People do not like their privacy breached, and this is embedded in the collective American psyche. It can be understood by the fact that the American Constitution ensured guaranteed privacy in the American Constitution. When people have their own home, separate, and independent, they can maintain and sustain their privacy. They can keep their affairs to themselves and live a quiet, peaceful, and non-interfering life (Madden, 2015).
- Home is a sound financial investment too, as to the time, the value of the house increases. It suggests that a house is not just a place to live, but also it is an investment that may have substantial returns in the form of Therefore, a home provides a nest-egg for the future. The real estate sector is a lucrative sector of the economy, and an individual can earn a low, in both long and short-run, if he/she invests in the form of owning a house (Hopkins, 2014).
- Rents are subject to inflation, which implies that rents may increase because of the changes in the general price level; however, mortgages are based on fixed-rate, which implies that they independent of the effects of the general price level. It is why owning a house is better than living on rent, which is subject to various kinds of changes in the economy, especially the general price level (InCharge, 2016).
- If one has the investment or money to buy a house, he/she should buy it because this will allow him to avoid paying monthly rent from the particular income. Also, the value of the house is supposed to increase with time. On the other hand, it is the rent, which will increase and studies suggest that increase in rents is comparatively more frequent than the increase in income (monthly) (InCharge, 2016).
- Another advantage, of owning a home through mortgage mechanism, is that both interest and property tax part of the mortgage payment is tax deductible. It has a direct impact on real income, which allows individuals to consume more. Such benefit is not attached to renting (Hopkins, 2014).
- Studies also suggest that there is a price attached to the ownership of a house. Home is a primitive concept, which is valid and relevant for humans in tribal setups. Therefore, the home has great importance in all cultures, and it is part of the American Dream. Also, this also allows individuals to connect with society in a better manner, which helps individuals and families in social and financial matters(Amadeo, 2017).
Cons and Factors Could Increase or Decrease Homeownership among the Generation
- Homeownership, through a banking or financial system, is a long-term commitment. The fluctuations in a capitalist economy can affect capacity to pay installments, which may create various kinds of challenges (Amadeo, 2017).
- Renting a house allows you to acquire a house according to your budget and generally, these installments are higher in cost than rents. Also, some rents include utilities, which mean that more can be saved (InCharge, 2016).
- For those, who is supposed to work in different parts of the region, renting is the best option. As most of the leases are of either 8 or 12 months; therefore, it becomes easy for an individual to move (Akinbami, Michie, & Hollow, 2016).
Collective Hesitation and Apprehension
On these grounds, Millennials must opt for a house; however, they have a job, which requires them to change their residence every 6 or 12 months, the best option is renting. For the study, we can infer that it primarily depends upon the financial condition and the nature of a job, on an individual. However, it must be recognized that most of the Millennials desire to own a house; but they do not have enough financial resources (Madden, 2015).
Conclusion
It is evident that owning a house is a better option, as it has several benefits. However, this eventually depends upon a couple of factors, such as financial condition and the nature of the job. The investment, in the housing sector, by the Millennials, will have a positive impact one economy; therefore, Millennials should not only be encouraged but also facilitated in owning a home. The desire is there, which must be facilitated by various, which include financial sector.
References
Akinbami, F., Michie, R., & Hollow, M. (2016). Complexity and Crisis in the Financial System: Critical Perspectives on the Evolution of American and British Banking (1 ed.). Edward Elgar Publishing.
Amadeo, K. (2017, September 15). What Is the American Dream? The History That Made It Possible. Retrieved from https://www.thebalance.com/what-is-the-american-dream-quotes-and-history-3306009
Crudele, J. (2017, November 14). Assessing the economy 10 years after the Great Recession. Retrieved from http://nypost.com/2017/11/14/assessing-the-economy-ten-years-after-the-great-recession/
Hopkins, J. (2014, September 25). Why Housing Is A Bad Long-Term Investment But You Should Buy Anyways. Retrieved from https://www.forbes.com/sites/jamiehopkins/2014/09/25/why-housing-is-a-bad-long-term-investment-and-why-you-should-buy-anyways/#41e9e4822605
InCharge. (2016, November 1). Advantages and Disadvantages of Owning a Home. Retrieved from https://www.incharge.org/housing/homebuyer-education/homeownership-guide/advantages-and-disadvantages-of-owning-a-home/
Madden, M. (2015, May 20). Pew Research Center. Retrieved from http://www.pewinternet.org/2015/05/20/americans-attitudes-about-privacy-security-and-surveillance/
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