Opinion: Rising inflation and housing crisis — Where is the American dream?
Rising inflation, unaffordable housing, high interest rates. The American dream feels out of reach for many
High housing costs. Rapidly rising interest rates. Surging oil prices. Escalating inflation.
If you don’t already own a home or if rising grocery costs don’t fit your budget, you might be excused for feeling a sense of dread. The American dream is built on homeownership and the idea that you can earn more in real dollars than your parents. But the elevated housing costs and surging interest rates are suddenly putting the first part of the dream out of reach for a growing portion of the population. And inflation is suddenly eating away at the second part.
Utahns can take solace in the fact that homeownership numbers are already strong. Utah has the sixth highest level of homeownership in the nation, and the highest in the West. That’s among the findings of a new Utah Foundation report, “The Ladder of Success: Social Mobility in Utah.” The report found that, while Utah’s share of households owning their own home dropped from about 74% in 2009 to 71% in 2013, it has since steadily climbed upward. By 2019, it had reached 75%. For perspective, compare that to California, at a mere 56%.
Homeownership is a time-tested means of wealth creation in the U.S. Purchasing a first home serves as both a signal of having arrived at middle-class status and an important rung on the economic mobility ladder. From the social capital perspective, a higher rate of homeownership also suggests a higher level of psychological investment in a community. Homeowners tend to pay more attention to civic affairs and to quality-of-life issues in their neighborhood, in part because the outcomes can affect the value of their investment. And because they pay property taxes, they might also pay more attention to whether those tax dollars are used effectively and efficiently.
That said, it will be interesting to see whether the spikes in housing prices and interest rates will arrest the upward trend in homeownership. In the meantime, as the Utah Foundation discussed in a recent housing series, local governments can help to create new homeownership opportunities by opening up the land use playbook.
Another ticket to social mobility is a postsecondary degree. Few dividing lines in our nation are as bright as the line between those who have some form of postsecondary degree or certification and those who do not. A shortfall in postsecondary educational attainment diminishes both social capital and economic prospects. And the consequences echo through generations, as the children of those with low educational attainment are more likely to follow suit. With all of that in mind, the Utah Foundation is in the midst of producing a series on educational attainment.
Looking at the four-year degree subset of postsecondary attainment, Utah compares well. During the past decade, the percentage of Utahns over 25 holding bachelor’s or higher degrees has increased by roughly one-fifth, settling at 35% in recent years. Utah is 15th in nation on this count.
The benefits go beyond the individual. For the society at large, postsecondary education can serve as a core means of bolstering the middle class and decreasing economic stratification.
Expanding educational attainment, from training programs to postgraduate degrees, will require aggressive engagement of young people. The recent Utah Foundation report, “Broadening Horizons: Clearing an Early Path to Post-Secondary Success,” explores key areas of concern:
- Setting high expectations at home and high standards in schools; ensuring early basic attainment.
- Getting all high school students to fill out financial aid paperwork; sharing clear information on postsecondary options.
- Providing an adequate number of school counselors.
- Promoting educational savings.
With workforce participation in long-term decline and unemployment rates in Utah at very low levels, there are plenty of opportunities out there waiting for skilled young people.
Fortunately, the hill that Utah must climb on this point is not the nation’s steepest. When it comes to youth engagement in education, training or the work force, our state performs among the top 10 nationally and is generally heading in the right direction.
Utah has clearly been doing some things right in keeping the American dream alive. And as economic challenges approach, the state’s best bet will be to double down on providing its youth the skills they need to keep dreaming.
Peter Reichard is president of the Utah Foundation, a nonpartisan, nonprofit public policy research organization. Reach him at email@example.com. Find the Utah Foundation’s research on social mobility, housing and education at utahfoundation.org.