The American Dream 2.0

The American Dream

The image of the American Dream that was prevalent 50 years ago may not bear much resemblance to the modern version of the concept.  Certainly for the Baby Boomers and the earliest Generation X arrivals, the idea of the American Dream was of a more traditional nature.

-Graduate high school
-Attend college to earn a bachelor’s degree
-Get a good job with a company that offered a solid pension plan
-Get married
-Buy a house
-Raise a family
-Pay off your mortgage
-Retire on your pension, supplemented by Social Security

In this version of the American Dream there may very well have only been one major real estate purchase involved in the plan – the purchase of the primary home. People stayed in that home their entire lives, eventually paying off a 30-year mortgage, at which time they would have a “mortgage burning party”.  The mortgage was burned either in the fireplace or over a trash can – a symbolic end to the greatest monetary commitment of their lives, and a reason to rejoice.

The concept of the mortgage burning, representing a life-long investment in one piece of real estate, has probably become something very unfamiliar to the younger American generations.

The American Dream 2.0

The landscape of the American Dream offers a different view for later Generation X arrivals and Generation Y/Millennials.

-Graduate high school
-Attend a college, perhaps a two-year school to obtain an associate’s degree,
followed by a transfer to a 4-year university for a bachelor’s degree, often followed
immediately by a transfer to yet another university in order to obtain a master’s
degree
-Get a a job that will serve as spring-board for your career
-Live at home with your parents or rent an apartment
-Move to a new city in order to take a position with a different company
-Move again – new city, new job, new apartment
-Get married
-Start a family
-Finally buy your first home
-Up size to a larger home to accommodate your growing family
-Sell that house and buy a new one in another city when you take a position
with another company
-Attempt to gain financial ground on each real estate transaction to fund your
retirement account (that pension plan doesn’t exist anymore)
-Down size after the kids are grown and out of the house (the kids are 30 years
old when this happens)
-Move to a smaller home (perhaps the third or fourth you’ve owned in you life)
-Retire on your investments/savings supplemented by Social Security

The end goal of American Dream 1.0 and 2.0 has remained the same – to be able to retire comfortably.  However, the path to that goal has changed substantially.

When people hear the phrase “real estate investor”, they often conjure an image of a fast-talking “wheeler-dealer”.  In reality, all of us who have ever bought and then sold a home are in fact real estate investors.  With the ever increasing strain on Americans to be able to retire at a reasonable age, the benefits of wise real estate investments can mean the difference between retirement and the need to continue working past the age that you envisioned yourself sipping a cool one next to the shuffle board court.

The path to the American Dream has certainly changed over the past 50 years, but the destination has remained the same – comfort and security.  Whether that represents a mortgage-free retirement in the home you’ve always known or leveraging your real estate investments in order to secure your future, wise real estate investment is an important part of the journey.

-Richard Keith Smith
Realtor®