In 1995, President Bill Clinton released his National Homeownership Strategy, a lengthy, 100-point plan with the eventual goal to “boost homeownership in America to an all-time high by the end of the century.” Eight years later, President George W. Bush looked at homeownership as a means of reducing racial inequality, signing the American Dream Downpayment Initiative to help first-time homebuyers land a home.
But that move brought us to the most catastrophic mortgage crisis in U.S. history, igniting the Great Recession of 2008–09, resulting in more than eight million home foreclosures. In the United States today, according to analysis by real estate services and investment firm CBRE, buying a home is now 52 percent more expensive than renting.
This type of economic reality is leading some to believe that renting has replaced home ownership, which has been one aspect of the American dream.
“One hundred percent, I believe this is the end of the American dream of home ownership. Foundationally, I’m a true proponent, but every way you spin it, home affordability has gone out of reach,” Nicolas Ritacco a real estate portfolio manager with IB Global in New York said to The Epoch Times.
A former CFO for real estate agency Keller Wiliams in Manhattan, Mr. Ritacco says the biggest cause of the dream shift is the Federal Reserve’s decision to raise interest rates from near zero in March 2022 to a range of 5.25–5.5 percent by the summer of 2023. “It’s supposed to happen slowly. What they did is like driving a Ferrari 100 miles an hour, pulling the emergency brake and going through the windshield. When you talk about crushing the American dream, that’s how it happens.”
U.S. Census Bureau data have shown that the homeownership rate has remained flat over the past year, at 66 percent, down from 68 percent in 2020. A sizeable drop in the share of buyers under 35 years has led to the decline, with that age group now at 38 percent, the lowest level since 2021.
Michelle Gonzalez, who along with her husband Kevin operates Floridian First Realty in Miami, told The Epoch Times that some of the younger potential homeowners are moving from rental to rental until they find an opportunity to buy.
“A lot of the people renting are younger and they’re working from home. They rent for a year or a year and a half and then test the waters. My analysis is that they’re scrolling online for houses like they would an Instagram feed, going from one property to another. Then they say, well, it’s too expensive and get in line for another property later.”
In its 2023 end-of-year report, rental platform company Zumper reported on what they referred to as a “seismic shift in attitudes toward renting versus buying a home” due to high interest rates, an uncertain economic climate, remote work opportunities, and a low consumer attitude toward home ownership.
In a written statement to The Epoch Times, Zumper Chief Product Officer Tanguy Le Louarn said more people than ever are putting home ownership out of their plans while prices and rates remain high.
“Some Americans will continue working toward the goal of buying a home, but they’ll wait for interest rates to drop before making that investment. In our survey, 79.8 percent of renters said they don’t think now is a good time to buy a home. That’s the highest percentage since we started asking that question in 2020.”
After a huge price spike following the pandemic, nationwide, the cost of renting a one-bedroom dropped by a tenth of a percent this year, according to Zumper. In their report, the company said it believes rent prices will drop by larger margins next year in cities where supply has caught up with demand.
With lower rental rates and more supply, Mr. Le Louarn says that many renters today are foregoing plans to move into homeownership at an increasing level. “We asked renters if they ever plan to buy a home, and 38.5 percent said no. That’s the highest number since we started asking and a 5 percent jump over last year. Many economic and social factors have been chipping away at the idea that to be a successful adult, you have to buy a home.”
However, according to Zumper, not all cities in the United States are seeing an increase in rental availability. The company reports that New York City is “notoriously undersupplied” while maintaining its status as a desirable location to live, contributing to consistent demand resulting in extremely high rental prices. The city is still the most expensive in the United States with the median price for a one-bedroom apartment at $4,160, an increase of 11.2 percent since December 2022. Two-bedroom apartments are up 10.2 percent year over year.
Those factors have contributed to even the well-heeled and famous residents of New York deciding to rent rather than buy, according to Mr. Ritacco.
“Renting versus buying is a big deal in New York City, and you now have celebrities renting because the house they actually want is $10 million. They’d rather waste millions on rent. So it’s not just people without cash that are renting.”
