Realtors reveal why the American dream of buying a home is nearly dead

Most Americans still dream of owning a home, but it’s increasingly likely that it remains just that – a dream.

Due to sky-high mortgage rates, the expense of a home and its care, a shortage of housing, and soaring down payment and closing costs, many people believe it’s nearly impossible to reach that white picket fence fantasy.

According to the US Federal Reserve, the median American house price was $420,400 in the third quarter of 2024 – a number many people just can’t afford.

‘Between down payments, current mortgage rates and the stress and commitment of home ownership, renting is now a more acceptable option rather than chasing the American Dream,’ says Branden Lombardi, President at BB Living, a company that offers spacious and luxurious homes to rent in communities across the US.

‘Options like build to rent communities give Americans the option to live in a luxury home community without the hassle and stress of home ownership.’

Lombardi says families, seniors and young professionals rent from him because they want the privacy and the benefits of a single family home without the stress of home ownership.

‘Mortgage rates are a factor, and many families are choosing not to buy at this time,’ he explains.

‘And many people don’t want the worries of maintenance or the financial commitment.’

Natural disasters are also playing a role.

Insurance rates have become so high due to floods and fires that many people are choosing to rent instead of buy in areas like California and Florida.

Mortgage expert Kevin Leibowitz, who runs Grayton Mortgage Inc., says it’s one of the top reasons existing home and new home sales are at multi-decade lows. 

‘This is largely due to high interest rates and not enough new homes being built,’ he told the Daily Mail.

‘Insurance in many places is getting more expensive. Big states like California, Florida, and North Carolina are all have large increases in insurance due to natural disasters.’

This greatly increases the cost of ownership, and interest rates are not helping the problem.

‘It’s easier to buy and carry the debt on a mortgage at 4 percent [as it has been in the past] than it is now at around 7 percent,’ he says.

‘In the US, over time, the greatest creation of household wealth has been equity in a home. Is it more difficult now for more people to obtain? Yes.’

For Andrew Fortune, Realtor & Brokerage Owner at Great Colorado Homes, in Colorado Springs, his average home buyer is now up to 56 years old.

‘Young people are becoming used to renting, making the idea of owning a home less common. We’re moving to a rental culture for young families, which will have a negative impact on the middle class in the coming decades,’ he says.

He also mentions insurance premiums, saying this is a barrier for people who live in Florida and Texas.

‘In many places, it currently costs less per month to rent than to buy. It doesn’t make sense for most first-time buyers [to buy now],’ Fortune says.

Low supply, inflation, home repairs, the costs of selling and mortgage rates all add stress to home ownership. 

For some Americans, the American dream of homeownership may not be completely dead, but it has shifted.  

Some buyers are turning to alternatives like granny flats, in-law suites, casitas, guesthouses and other tiny homes.

Developer Paul Dashevsky is co-founder of MaxableSpace, which is the leading construction resource website for these alternative homes, known officially as additional dwelling units (ADUs).

He says the cost of purchasing a property is at an all-time high, forcing Millennial and Gen Z families in particular to be priced out of the real estate market and unable to purchase their own home, even as their family grows. 

‘We’ve seen a trend where the parents of this generation, those that already have a home, choose to build an ADU in their backyard to house their adult children and their young family,’ Dashevsky says.

‘They see this as a great way to add value to their property while also providing a comfortable home for their adult children and see their grandkids often.’

ADUs have also become popular for housing young adult children who are coming back to live at home after college. 

Many recent graduates need to save money without paying rent, and they also benefit from shared resources like groceries,…