American Dream Alive and Well for Millennials, Minorities: Zillow
Millennials and non-whites make the strongest association between owning a home and the American dream, according to a survey from Zillow.
The semi-annual Housing Confidence Index poll, released Tuesday, found that 65% of people 18-34 years old agree with the connection between homeownership and achieving the American dream. The survey, which is broken down along generational and racial demographics, found that nearly 70% of Hispanics also have the expectation of homeownership.
Among millennials in a particular metropolitan area, those in Los Angeles-Long Beach-Anaheim agreed the most (86.9%) with the homeownership/American dream association, while that demographic agreed the least in Philadelphia (44%). The next of the four generational groups surveyed that supported the association were 65 and older, roughly the millennials' grandparents, at 63.9%. People 50-64 agreed the least (56.9%).
A separate study from the Lenders One mortgage co-operative found that 79% of originators feel millennials provide the best growth opportunity for their business in 2016. In addition, 71% feel Hispanics represent a growth opportunity this year, while 70% cited nontraditional buyers in the rental and vacation home markets. Boomerang buyers — those consumers looking to get back into homeownership after undergoing a short sale, foreclosure or bankruptcy — were cited by 68% of the respondents as a business opportunity.
The Zillow survey also found that among Asian respondents, 64% agreed with the association between homeownership and the American dream, followed by 63% of black respondents. White respondents showed the least agreement at 57.6%.
The cities and regions with the greatest agreement among Hispanics were Detroit (87.5%) and among Asians Chicago (82.9%), while the highest percentage of black respondents were in Minneapolis-St. Paul (77.4%) and of white respondents Los Angeles-Long Beach-Anaheim (64.2%).
Conducted by Pulsenomics, a research and consulting firm, the Zillow-sponsored survey asked 10,000 renters and homeowners nationwide about the status of their local real estate markets and expectations for growth in home values and future affordability, as well as their views on homeownership.
In its news release about the survey's findings, Zillow did not indicate what defines "the American dream," although it indicated that homeownership is "necessary for the good life," "necessary to live" or "integral to" the American dream.
"The American dream is really about opportunity, which means a lot of things to a lot of different people," Svenja Gudell, chief economist at Zillow, said in the release. "For young Americans and Americans of color, the opportunity to own a home is a big part of that dream."
Millennial households expect home values to appreciate 5% annually over the next 10 years, and confidence among millennials and Hispanics has been infectious in helping to boost overall confidence in housing markets to a 66.9 headline index, in which a number exceeding 50 indicates general confidence, according to Zillow.
However, the survey also found that despite millennials' optimism, fewer renters among them (46%) were confident in their ability to afford a home, compared to 50% six months ago. Millennials have rented longer than previous generations as they prolong major life decisions, Zillow said.
The survey results come at a time when rising rents and stagnant incomes are the new normal, causing Americans to struggle to purchase a home. In January, the number of homes for sale in the U.S. declined 8.6% compared to a year earlier, while home prices continue to rise, according to a Zillow report.
Although, Terry Loebs, founder of Pulsenomics, said housing confidence has nevertheless increased in every metro area survey over the past two years and fueled the market recovery.
"Amidst turbulent financial markets and unsettling election year politics, confidence in the U.S. housing market has proven resilient in recent months, even as investor confidence, business confidence and consumer economic sentiment have wavered," he said.