Here's more evidence that the foreclosure crisis has changed the way we think about home ownership's place in the American dream. Nearly half of those polled in a newly released survey said that owning a home today was a "nightmare."
Nearly 70% of those surveyed by Home Value Insurance Company believed home values had gone down in their neighborhoods in the past three years. Most either expect them to continue their descent (19%) or remain static (67%) in the next year. More than a third (37%) said buying a home is generally risky, and nearly 20% said they aren't sure they'd recommend home ownership to a young person.
According to the survey, the biggest risk that homeowners perceive is declining home values. There's plenty of reason to worry. According to newly released data on the third quarter from real estate site Zillow.com 28.6% of all mortgage holders owe more on their mortgage than their home is worth. There's more pain to come: Home prices are down 4.4% compared to the third quarter of 2011 and, Zillow predicts, prices won't hit bottom until 2012.
Whether or not the foreclosure crisis has upended the American Dream is a popular line of questioning for pollsters. And surveys don't point to a clear trend. Nearly 90% of those surveyed in June by The New York Times and CBS News said home ownership was an important part of the American dream, though nearly a quarter said their home was now worth less than what they owed on their mortgage. In September, 70% of those responding to Trulia's American Dream survey, still said they believed that home ownership was a central part of the American Dream, a level that had been unchanged since January.
The View From the Home Front
"I once looked at my home as my dream," says Alexis Booras, of Sadsbury Township, Pa. "Plenty of room for pets, a beautiful yard, quaint, perfectly sized Cape Cod in a very safe, family neighborhood. I didn't buy with the intention to sell; I planned to retire here, in my own little paradise."
"Now I fear that I won't even have my home when I'm 55. The state of this country, real estate and the economy has turned my dream into a nightmare of living in constant fear," says Booras, who was laid off from her $83,000-a-year job of 25 years in 2009, at age 50. She is still unemployed.
To Buy or Not to Buy?
So, is it still worth it to own a home? "Worth is a slippery slope -- subjective," says Michael Kay, a financial adviser and president of Financial Focus. "Redefine your values and make decisions based on them. The American Dream is being recast toward lifestyle, and not necessarily home ownership."
For those who remain undaunted by years of declining prices, Kay says, "Look at the worst case scenario. If you take out a variable rate mortgage, find out what's the maximum payment possible. Be ready to spend for maintenance. View the deal as you would any investment, but ask yourself, does it provide peace of mind, roots, sense of family-stability? Define your 'why' before walking down that road. Look at the numbers carefully. If it's a good deal --- go for it."