More Americans Putting The 'Dream' On Hold

NPR's new series explores how the "American Dream" is evolving during a period of economic uncertainty. Host Michel Martin talks with NPR Senior Business Editor Marilyn Geewax about the series, and whether home ownership is still at the heart of the "American Dream," even after the historic collapse of the housing market.

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MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. Coming up, it's Memorial Day and we know what you're doing right now - either grilling barbecue, eating barbecue or smelling somebody else's barbecue. Memorial Day kicks off the official start of grilling season for many of us. Later in the program, we will hear from a very interesting woman whose new cookbook is full of tips to make your barbecue soar, even if you haven't been marinating for days. So that's just ahead.

But first, getting back to today, some of us are enjoying the holiday at the beach or the pool, but we bet many people are just enjoying their own backyards and that got us to thinking: Just what does it mean to us to own that piece of yard or stoop or wherever we call home?

This week NPR's launching a new series called "American Dreams." For years, that has meant owning a home, and for much of the last decade Americans rushed to buy homes and in many cases with little or no money down. The move has backfired on many Americans, on the economy, and on the American Dream.

So we wanted to ask: What is the American Dream now? NPR's taking a closer look and we've asked NPR senior business editor Marilyn Geewax to talk about what the series will cover and to consider the role home ownership is playing. She joins us here in our Washington, D.C. studios. Once again, Marilyn, thanks so much for joining us once again.

MARILYN GEEWAX, BYLINE: Hi, Michel.

MARTIN: So why this series at this time?

GEEWAX: Well, this phrase, the American Dream, we're going to hear it over and over again between now and November. It's so powerful because Americans, we really aren't united by a common ethnicity. We don't have a shared history that's tied to a certain place. The thing that brings us together is this shared national ethos - our spirit.

Collectively, we all believe in freedom. We believe in prosperity. We think hard work should be rewarded. So this notion of the American Dream is very powerful and we're already hearing it from the presidential candidates. Here's President Obama. He was speaking earlier this year in Iowa.

(SOUNDBITE OF CAMPAIGN SPEECH)

PRESIDENT BARACK OBAMA: Now, folks don't have unrealistic ambitions. They do believe that if they work hard they should be able to achieve that small measure of an American Dream.

GEEWAX: So Democrats are going to be using that phrase to argue that their policies can help more people achieve their dreams, but Republicans will be doing that too. Let's listen to Mitt Romney. He was speaking recently in Illinois.

(SOUNDBITE OF CAMPAIGN SPEECH)

MITT ROMNEY: For centuries, the American Dream has meant the opportunity to build something new. Some of America's greatest success stories are people who started out with nothing but a good idea and a corner in their garage. But too often today, Americans who want to start a business or launch a new venture, they don't see promise and opportunity. They see government standing in the way.

GEEWAX: So there you go, Michel. We're going to hear both Democrats and Republicans saying they are the ones who can promote the American Dream. So this seems like a good time for NPR to take a look at what this means. All of our news programs in the morning, the afternoon and on the weekends as well, we're going to take a closer look in coming weeks at what are these American Dreams we're having in the 21st century.

MARTIN: Can you give us a preview of some of the topics that will be covered in the series?

GEEWAX: We're going to look at statistics on economic mobility. Can you move up? Will your children move up? Veterans, how are their prospects looking? What about immigrants? And other aspects - pop culture. How do we define the American Dream in music and movies today? There are going to be a lot of different angles that we'll be covering.

MARTIN: We're particularly interested in housing, I think, because I think for many people that is a fundamental piece of the American Dream, the ability to even think about owning one's own home. And for most people, not owning only one home, owning a better home. How are you taking a look at this issue?

GEEWAX: Well, Chris Arnold - he's the reporter who covers housing for NPR - he'll be doing a deeper dive into that. But, you know, for you and me I think Memorial Day is a good time to take a look at home ownership. There was a study that was released from the Woodrow Wilson Center just last week and people were asked to rate the importance of home ownership to them on just a purely personal level. And the majority of Americans give it a 10 out of 10.

MARTIN: A 10 out of 10?

GEEWAX: It's that important.

MARTIN: That clear.

GEEWAX: And, you know, two out of three Americans own their homes right now. But we've seen a shattering of that dream during this terrible foreclosure crisis.

MARTIN: Well, you know, obviously, if you're in the middle of it then the crisis is still going on, but statistically, just thinking about the country on the whole, do economists, the people who keep track of this, think that the worst is over?

GEEWAX: Yes. It looks like the worst is over but it's still playing out. Let's just look back on kind of what's happened here. If you go back to 1990, the U.S. home ownership rate was about 64 percent. And then, we kind of went on this home buying spree. Everybody was building houses in the suburbs. The home ownership rate shot all the way up to 69 percent.

So millions of people bought homes for the first time and a lot of those people were African-Americans and immigrants who finally felt like their dreams were coming true. They were getting a piece of the American Dream by buying a house. But over the last five or six years that's really turned into something of a nightmare.

The home ownership rate is now back down to 65 percent and some economists say that it's going to keep falling because about 11 million people owe more on their mortgage than the house is worth.

MARTIN: And why is that important? I mean, if people aren't planning to move why is that considered such an important and perilous situation?

GEEWAX: Once you realize that you're - the phrase they use is underwater - that you're underwater. That is, you owe so much that you don't even have the equity in it. You're losing ground. It gets easier and easier to just mail in the keys and walk away from it and say forget it. I just can't keep up.

MARTIN: I'm speaking with NPR's senior business editor Marilyn Geewax. She's telling us about NPR's series that's running all this week starting tomorrow on MORNING EDITION. It's called The American Dream and she's talking - we're picking a particular focus on housing and how our sense of the American Dream is affected by our relationship with housing.

Now, you said earlier that a lot of the gains, that increase in the home ownership rate was due in large part to ethnic minorities who were achieving home ownership for the first time. Is it also the case then that these losses are being borne mainly by the same groups?

GEEWAX: That is a very sad but true thing. It's sort of - they call it LIFO, the last in first out effect. That is, the people who were the most recent homeowners, they tended to be the ethnic minorities who were buying a home for the first time and they were using those subprime mortgages that really turned into bad products for a lot of people.

So they were disproportionately harmed by the subprime market and a lot of times African-Americans and minorities were buying in homes that were in more marginal neighborhoods, where the prices when things started going bad, they fell the most. So a lot of people there lost their homes.

MARTIN: Is this a racial issue or is this a class issue? Is there evidence that racial minorities were specifically targeted for these or is this a function of people being, say, first time home buyers, just in the same way that first generation college students...

GEEWAX: Yeah.

MARTIN: ...are having more difficulty completing college often because they don't have anybody to show them the ropes?

GEEWAX: Yes. I think there were predatory lenders. There's pretty good evidence that people really went out of their way to target people who were unsophisticated about these things. Maybe it's the first time you ever bought a mortgage. You couldn't learn from your parents because they had never had a mortgage.

So there were a lot of people just sitting there ripe for the picking for these predatory lenders. And in some cases there was some greed. People just thought, wow, I could flip this house real quick and they got blinded by the excitement of that you can buy a house and two years from now sell it and make money.

So a lot of things came together but it really was a crushing effect on people who were the relatively new home buyers.

MARTIN: What about people who are still in their homes, particularly in neighborhoods that have been heavily affected by this wave of foreclosures? Are we seeing an impact beyond the people who are directly affected?

GEEWAX: Absolutely. Everyone who owns a home, I mean, just about 100 percent of everyone has been hurt by the housing crisis and that's because home prices across the board fell so much. About a third of the value has gone away since this crisis began and, you know, we're seeing in the most recent reports there is an uptick in sales, but the market continues to be far below where it should be, way below where it would've been if we hadn't had this big foreclosure crisis.

So all of this is really taken a hit on personal wealth. People's homes are worth less, and that hasn't been lost on young people. So we're seeing a bit of a shift in their attitudes about home owning and the American Dream.

Let's listen to one of these younger people, Cynthia Spalding. She lives in New York City.

CYNTHIA SPALDING: Now, people really need to seem to focus on their careers and family and getting that house and everything. It just isn't something within grasp for a lot of young adults right now. So sometimes, the American Dream, you know, is put on hold. It is attainable. It's just - I think it takes a lot more effort than probably our parents had to put forth back in the day.

GEEWAX: We found Cynthia through our Facebook page and she really represents what a lot of young people are thinking these days. There's not quite as much craving for a house with the younger generation. People in their 20s, 30s - they're more inclined to want to rent because they can hop to different job opportunities. They want to pay down all of that student debt.

A lot of people in their 20s - they saw their parents get burned with foreclosures. Their memories of home ownership is not so much the white picket fence as it is the U-Haul truck and your mom crying. There are a lot of people who felt this very deeply, so we've seen a little bit of an attitude shift.

But I think, in a way, it's not giving up on home ownership as much as it's moving towards more of a - the way Germans think about home ownership, which is that a house is something you aspire to get eventually. It's sort of the reward you get after you've established yourself in your career. You don't start by buying a house and work your way up. You work your way up and then buy a house.

MARTIN: You're telling us that there's a change, particularly among younger people and their attitude about home ownership, although Americans still value it highly. And a lot of people have lost their homes. Given all that, what are economists forecasting about a return to those record home ownership rates? Is that in the offing, and is that even desirable, Marilyn?

GEEWAX: Well, it's not likely to get back to 69 percent any time that you can see for many, many, many years because this market has taken such a beating, but I think that what you're really seeing is that people have a different attitude towards houses now.

In 2001, if you bought a house, it didn't matter what phase in life you were in. If you held onto it until 2005, you could flip it and make a profit. Today, home ownership is really returning more to that idea that a house is someplace where you settle down. You're looking for a stable neighborhood. You look at a house as a way to shelter your loved ones, your possessions and your money. It's a pretty good place to sink your money. Instead of paying rent every month, you put it into the house and you can build equity over time.

So if you look at it as shelter and a slow growing, long term investment, financial planners will tell you that owning a house can still make a lot of sense.

MARTIN: That's NPR's senior business editor, Marilyn Geewax. She was with me here in Washington, D.C. You can hear more of NPR's series, The American Dream, all this week starting tomorrow on MORNING EDITION.

Marilyn, thanks so much for joining us.

GEEWAX: Oh, you're welcome. It's always a pleasure to be here.

(SOUNDBITE OF MUSIC)

MARTIN: Coming up, she's a singer and songwriter, but Ruby Dee of the rockabilly group, Ruby Dee and the Snakehandlers has also been cooking since she could reach the countertops in her grandmother's kitchen, she tells us. And now she's going to tell us what she's cooking up for Memorial Day.

RUBY DEE: Peaches are coming into season right now and so is lavender in our gardens, so I'm going to probably make a peach lavender cobbler.

MARTIN: That's ahead on TELL ME MORE from NPR News. I'm Michel Martin.

(SOUNDBITE OF MUSIC)

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