Millennials and people of color are most likely to associate homeownership with the American Dream, according to the latest Zillow Housing Confidence Index (ZHCI).
Among people 18-34 years old, 65 percent said homeownership and the American Dream go hand-in-hand. That's more than any other generation. Similar to millennials, 64 percent of respondents age 65 and older said homeownership is necessary for the good life and the American Dream.
People-of-color also were more likely than white people to consider homeownership integral to the American Dream. Of Hispanic respondents surveyed, 70 percent agreed that owning their own home is necessary to live the American Dream, followed by 64 percent of Asian respondents and 63 percent of black respondents. Almost 60 percent of white respondents agreed.
The survey results come at a time when rising rents and stagnant incomes are making it tough for many Americans to buy homes. Millennials are renting longer than past generations as they put off major life decisions, but Zillow's survey shows millennials value homeownership more than their parents and grandparents.
The rising confidence of millennials and Hispanics, in particular, are helping to drive rising overall confidence in the housing market. Confidence in the housing market overall has increased from six months ago, to a headline index of 66.9. An index number over 50 indicates general confidence.
With their faith in the value of homeownership and their optimism in the market, these groups will play a key role in ensuring the stability of the market as demographics change. For example, millennial households have more confidence in the housing market compared to the general population, and expect home values to appreciate 5 percent annually over the next 10 years.
"The American Dream is really about opportunity, which means a lot of things to a lot of different people. For young Americans and Americans of color, the opportunity to own a home is a big part of that dream," said Zillow Chief Economist Dr. Svenja Gudell.
"It's often assumed that homeownership holds little interest for these groups, or that they may feel the challenges in achieving homeownership aren't worth the benefits. But that's simply not true, and their optimism and determination today will be hugely important to the stability and growth of the housing market tomorrow. These Americans represent the next generation of U.S. homeowners, and for homeownership to eventually become a reality, it has to start as a dream."
The semi-annual U.S. Housing Confidence Survey (HCS), sponsored by Zillow and conducted by Pulsenomics LLC, asks 10,000 renters and homeowners about the condition of their local real estate market, their expectations for home value growth and affordability in the future, and their views on homeownership.
"Amidst turbulent financial markets and unsettling election year politics, confidence in the U.S. housing market has proven resilient in recent months, even as investor confidence, business confidence, and consumer economic sentiment have wavered," said Terry Loebs, Founder of Pulsenomics. "Housing confidence has increased in every metro area surveyed over the past two years and fueled the market recovery. This is reassuring in the face of economic and financial market headwinds."