"...and that way, Americans...can realize the American Dream and stay in their home."
Thus spake John McCain, Republican presidential nominee, during the second presidential debate. Since when did the American Dream become owning a home? McCain and Republicans aren't the only ones who make this equivalence; Democrats do it too. Actually, ask anyone out there what the American Dream is, and they'll probably tell you that it is home ownership.
It's not my dream. I've got a home, but my dreams aren't fulfilled. If you own your home, you may feel the same.
What is my dream? The same thing it's been since I was in grade school. I'd build a big house with a padded bounce room and a bedroom with a slide from the window to the pool.
What is your dream? Probably not that...
The point is, the American Dream is as personal and unique as the individual who holds it. When politicians decree that the Dream is homeownership, they put it upon themselves to help everyone they can get a home. That's the mentality that created the Community Reinvestment Act which has contributed greatly to the current mortgage default crisis.
"...Life, Liberty and the Pursuit of Happiness." That is the American Dream, and it is rooted in the principles and merits of individual achievement. It is not defined, nor is it provided by the government. It is not. And it never, ever should be.
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Just bear in mind that home ownership is the springboard to financial independence; most people's primary investment is their home, and their home is the asset upon which retirement is predicated. Retirement may not be part of your American Dream, but I sure think there are some who work hard every day of their adult lives just for the chance to someday stop working and spend some time with the grandkids. For many, many people, their home value is their nest egg. Once again, I'm compelled to remind you that your financial position is not the norm.
Perhaps you nailed it here...You say "financial independence." If there is a single, identifyable, de facto American Dream, it is probably financial independence. Possessing this would open the door to all other dreams, virtually regardless of the nature or scale.
I dispute the notion that home ownership is the springboard to financial independence. The springboard is a good, healthy savings habit. What one does with the savings may vary. It could be buying a home, it could be starting an IRA.
A home is not an asset, despite what your bank may tell you. And it should not be the basis of a nest egg. If it's not an asset, then it's a liability. This can be proven in two ways.
First, when you sign a note of debt to a bank, the bank will list the note as an asset on their balance sheet, as it provides them income. If the bank lists it as an asset, you cannot do the same on your own balance sheet; it must be a liability.
Second, what defines an asset? Assets generate income. If you own a dividend-paying stock, that stock generates income for you. Assets feed the income portion of a business' income statement. Liabilities feed the expense portion of the income statement. Another example, as I stated before, is your bank and your note. The bank lists the mortgage on their assets column on the balance sheet, and this asset generates income which is reported on the income statement. You make no money off of your home. In fact, you pay a lot of money to maintain that liability. The instant you purchase a home, you take on responsibility for maintenance, yard upkeep, property taxes, insurance, etc. These expenses generally range 1-2% of the value of the home.
I'm getting really off topic here...
The past decade has seen people fed the false notion that gaining home "ownership" will get them on the road towards financial independence. This fallacy has contributed greatly to the situation we're currently in.
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