Q. Is the American Dream of home ownership dead?
A. It depends on who you talk to and what you want to believe. Warren Buffett says, "Buy buy buy" and Suze Orman says, "The American Dream is Dead." There is no crystal ball to predict the future, but at the end of the day, everyone needs a home to go home to. So whether you rent or buy a home is really a personal decision.
According to a survey by Trulia.com (a popular home search website), 70% of Americans, both renters and homeowners alike, do NOT believe the dream of home ownership is dead; home ownership is still part of their personal American Dream. However, this is down from 77% from just one year prior (Q1 2010).
78% of home owners surveyed still say that their home is the best investment they ever made. Additionally, 88% of the renters surveyed in the 18-34 age bracket aspire to be a home owner.
Warren Buffet has said that buying his house was the 3rd best investment he has ever made. What won out in the #1 and #2 spots? The ring he bought his 1st wife and then the ring he bought his 2nd wife after his 1st wife’s death. (See even Buffett knows that a happy wife is a happy life.)
Buffett still lives in the same home he purchased in 1958 in Omaha, Nebraska. In a letter to shareholders at Berkshire Hathaway, Inc. dated February 26, 2011, Buffett wrote, “For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come.” Buffett went on to say, “A housing recovery will probably begin within a year or so. In any event, it is certain to occur at some point.”
A few years ago when the Dow was at 7,000, some financial advisors were still recommending to get out of the stock market if you hadn’t already. Anyone who listened then surely regretted it. Warren Buffett is a billionaire (the 3rd richest man in the world) and his message on the real estate market is both optimistic and realistic, so we are going with Buffett on this one. The American Dream of home ownership is not dead!
Quotes From Warren Buffett
A public-opinion poll is no substitute for thought.
In the business world, the rearview mirror is always clearer than the windshield.
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
I buy expensive suits. They just look cheap on me.
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
When a country needs more income, they should get it from the people that have it.
In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
Chains of habit are too light to be felt until they are too heavy to be broken.
~Lisa
Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for help buying or selling a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County of Pennsylvania. To Search for Homes For Sale in Montgomery County Click Here.
Is the American Dream of Home Ownership Dead? - Copyright © 2011, The Scott Loper Team, All rights reserved.
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The Scott Loper Team
Scott Loper - Associate Broker
Lisa Loper - Sales Associate
Gina Wherry - Sales Associate
RE/MAX Realty Group
439 Main Street
Harleysville, PA 19438
Ph: 215-256-1200 x-213
He is a genius. I wrote a post on the direction of rates a few months ago based upon Buffett's recent shifts in borrowing habits. You would probably like. I would include a link but don't want to hijack your blog:)
Hi Ryan,
Please do. I would be interested to read it.
Lisa
Gotta listen to a man smart enough to stay in the same house for 52 years!
Good Post, I too do not believe the American Dream is dead. People are so proud to own their own home especially if the house is a home. Warren Buffet is one of the smartest men we have, I don't always agree on all he says, but then do we with anyone. The housing market will turn upward at some point, the quest to own one's own home is not gone.
Doug, Warren Buffett exemplifies a contentment that all homeowners should enjoy.
Mary, I have to agree. The majority is not going to want to live in apartments when their circumstances can afford to own a home.
Lisa
Lisa - First and foremost, I too don't think homeownership is dead and my borrowers agree because quite a few of them are buyer for less than what they were renting for. Furthermore, if Warrent Buffet thinks it's still a good idea then that says it all. Lastly, Suzy Orman is a nit-wit and I'll just leave it at that (yeah, that's right, I don't like her).
Donne, We just had a renter turned homeowner whose payment is now less than her rent and her home is way nicer.
Lisa
Lisa - I've been seeing that same scenario for awhile now too. Here in Los Angeles & Ventura counties, rents have been inching up for about two years now. During the same time, like you, I have been putting my borrowers in loans where the monthly PITI on their 3bd home is actually less than the rent was on their 2bd-3bd apartment. That seems to be the advantage point.
Whenever I have a borrower going from a 1bd apartment to a 2bd or 3bd home, the monthly PITI is always a little higher (avg $100-$200). However, I just recently had a borrower go from a 3bd apartment to a 4bd home and the monthly PITI was minuscule ($14 higher). For those that can qualify for a loan (therein lies the first obstacle), buying is still better than renting.
Donne, In our case, our renters went from a 2BR/1BA condo on a single level to a two floor 3BR/2.5BA townhouse in beautiful shape with a garage and storage shed. And the payment with the association fee is a little less than the rent. Previous credit issues made then think they couldn't buy. Our mortgage guy was great helping them through it.
People sitting on the sidelines are missing out on a terrific opportunity to own.