Is the American Dream at Risk? Exploring the Next Steps in the Housing Crisis.

For much of 2023, Emily Craig found herself without a job. As the holidays approached, her unemployment benefits had already dried up.

“It was a tough period,” shared Craig, 34, from Woodstock, Virginia. “The impact on your mental well-being and social interactions is huge. You’re restricted financially; social activities become a burden due to costs. It’s all quite disheartening.”

However, December 2023 brought a ray of hope. A position she had previously applied for and was rejected, suddenly became available again. She quickly applied and this time, she received positive news: she was hired as a recruiter at a firm known for its exceptional corporate culture. A couple of months later, her fortunes improved further when she considered purchasing a house just as the owner of a quaint 126-year-old property decided to sell.

Deciding to buy a house was a complex choice for Craig. “Owning a home means investing in myself rather than paying rent to a landlord. It’s a significant investment, but it also means setting down roots in a community I’ve grown to adore,” she explained.

The American dream of home ownership and building equity is becoming increasingly difficult to attain. In 2023, the housing market was so strained that home sales hit their lowest in thirty years. Factors such as a decade of insufficient building post-financial crisis, strict zoning laws, and tariffs on construction materials have all played a role.

Moreover, the rental market isn’t faring much better. Recent studies have shown that high rental costs make it nearly impossible for many to save enough for a down payment and closing costs.

Despite such challenges, stories like that of Emily Craig, which might seem extraordinary or even unattainable, suggest that urgent action may be needed from policymakers.

“This crisis in housing affordability deeply impacts families,” stated Shaun Donovan, CEO and president of Enterprise Community Partners and former secretary of the Department of Housing and Urban Development. “It’s a widespread issue affecting every region from Idaho to rural New Mexico, creating a broader political imperative than ever before.”

Choosing Less Costly Living Areas

While some, like Craig, find unexpected opportunities, others, like Mason Dorrian, 24, a recent master’s graduate in accounting from Ohio State University, have different priorities. Dorrian moved back with his parents in Columbus, Ohio, to save money while job hunting.

Dorrian understands the financial benefits of owning a home but prefers the flexibility of his current life stage to pursue various opportunities without being tied down. However, he acknowledges that even the initial steps towards independence his parents took are now out of reach for many of his peers.

“My mom could intern in New York City years ago, and back then, you could try out different careers. But now, places like New York are just too expensive for young people like me to even consider,” Dorrian explained.

The federal government plays a crucial role in facilitating homeownership. For instance, Emily Craig secured her home loan through the U.S. Department of Agriculture, which offers specific loans for rural areas. Agencies like Fannie Mae, Freddie Mac, and the Federal Housing Administration back a significant portion of mortgages, providing essential support to the housing market.

In addition to mortgage support, HUD invests billions annually to help develop affordable rental options through the Low Income Housing Tax Credit and other programs. Freddie Mac also contributes significantly to the multifamily housing sector, ensuring that many units are affordable for low-income families.

Experts like Ted Tozer, a nonresident fellow at the Urban Institute, believe that while home ownership remains a dream for many, it is becoming increasingly delayed due to various economic pressures.

The Persistent Dream of Homeownership

Nicole Robinson, 26, who owns a home with her husband in Richmond, Virginia, sees homeownership as still achievable but increasingly difficult due to rising costs and significant student loan debts.

As Brian Montgomery, former HUD deputy secretary, pointed out, the increasing costs associated with buying a home are creating a generational divide, exacerbated by stagnant sales and high interest rates that prevent both first-time buyers and existing homeowners from moving forward.

Despite these challenges, Montgomery believes the federal government has a role in promoting innovative housing solutions and reducing regulatory burdens to help more Americans achieve homeownership.

“The Dream Is Still Alive”

Emily Craig’s journey illustrates that while there is no simple solution to the challenges of homeownership, determination and government support can make a difference. “Owning a home takes continuous effort and commitment,” Craig stated, emphasizing the importance of self-advocacy and making informed choices.

Craig’s experience reflects the enduring nature of the American dream of homeownership, supported by both personal effort and public assistance, proving that the dream, although challenged, is not extinct.