Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Dec 7, 2011

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The United States of America was founded on the principal of freedom, and the right—not the privilege—to increase one’s personal life based on ability and works. The American Dream, perhaps the single most unyielding piece of the sometimes invisible “American Culture,” perpetuates this ideology, and promises each citizen the opportunity to better their lives if they have the ability and determination to do so. This idea is so firmly grounded in the country’s paradigm that the most famous line of the Declaration of Independence’s is the one stating everybody is given the right to “Life, Liberty and the Pursuit of Happiness.”


A less known fact about this famous national phrase is that it was taken from a quote by the English philosopher John Locke… but it was changed.


John Locke, the father of Empiricism, felt all men were created equal, and each had a natural right to “life, liberty, and property.” While the United States ultimately adopted the more politically correct third word of “happiness” over “property,” American’s have always seen that white picket fence and green front lawn as the pinnacle of success. Homeownership has always signified the “achieving” of the American Dream.


The Dream is Changing


But that ideology has been wrapped up in a cocoon and begun a transformation. Since the Great Recession, Americans have been rethinking the importance of homeownership. What was once seen as the apex of the American Dream has turned into one of the most massive financial burdens Americans have experienced—all over the course of the last 10 years.


Across the nation, upside-down home loans weigh millions of mortgage holders down. Lenders have been crippled by the amount of defaults resulting from debtors’ high monthly payments on mortgage loans and negative equity. The idea of owning property has become so repulsive—and downright scary—that many are turning exclusively to renting.


Even when home loan payments are proving to be cheaper than renting, the nation is keeping their hands clean of long-term debt.


“The emotional scars left by the collapse are changing the American psyche,” said Pete Flint, chief executive of the real estate site, in an article by the New York Times. “There was a time when owning a home was a symbol you had made it. Now it’s O.K. not to own.”


Mr. Flint’s analysis of the mortgage loan market isn’t some scare tactic or slippery slope reasoning—the statistics prove his point.


DataQuick, a real estate statistic aggregate, reported the national home sales in November saw a decline of 9.94 percent on average when compared to home sales three years ago at the same time.


The last ten years have caused American’s to avoid mortgage loans like they’re the plague.


Who’s to Blame for this Paradigm Shift?


As fewer and fewer home loans are being taken out, blame has been hurled back and forth in the political arena.


Those on the left claim the recession was an inevitable product of capitalism’s inherent greed. In their eyes, unhindered capitalism allowed lenders to take advantage of the masses, issue subprime home loans, and ultimately put the nation in a position that was economically unfeasible to maintain. The country could not support the financial burden, and thus crumbled.


Those on the right saw the housing downfall as a product of the expulsion of capitalistic ideology: too much government, too many handouts, and the lack of personal responsibility. They claim the government turned homeownership into a right rather than a privilege, and that hand-holding the country gave the public ultimately led to the financial collapse.


Much like the fate of a child whose parents never removed the training wheels from his bike—he would inevitably fall when he rode a more grown-up version of his favorite toy.


But as the famous saying goes: when you fall down, get back up.


America, Achieve Your Dream


Setting all blame aside, the country as a whole needs to realize that economic trends are cyclical, and, despite how bad this seems, we have fought through worse economic times than this. In fact, this may be just the right time to get a head-start in the American Dream Race by acquiring a home loan.


With mortgage rates at record-breaking lows (which are expected to remain at such levels for another two years, according to the Federal Reserve), current renters are in perfect position take out a mortgage loan and join the ranks of the nation’s homeowners.


As previously mentioned, some areas are even reporting average mortgage payments being lower than average rental payments. If a renter is fortunate enough to be in one of those cities, it then makes common financial sense to begin pursuing qualification for a home loan.


In fact, even for those areas without such positive rental-versus-mortgage-payment statistics, pursuing a home loan is a prudent choice for any who are financially able to at this point. The country needs to shed its fears of negative equity, underwater homes, and upside down loans. As jobs begin returning, and more houses are plucked up, real estate prices will rise.


It’s simple supply and demand.


Right now is a buyer’s market, and buyers need to make wise choices about their future. The fact remains—the American Dream is still that white picket fence. Americans still want to own property. Since Americans are granted the unbridled right to better their lives if they have the ability and determination to do so, then they should take advantage of that right. If the finances are there, the ability likely is too. All that’s left is to find the determination, and make that stretch for the American Dream.