Homeownership has always seemed to represent the American Dream, which is why so many families scrimp and save to buy a place to call their own. But recent data suggests that the dream may be dying. According to a Gallup poll, homeownership is down to 61%, which is the lowest it's been in almost 15 years. But it's not just that fewer Americans are buying homes; it's that they don't expect to be able own anytime soon. In fact, 41% of non-homeowners have no plans to buy at any point in the foreseeable future. Meanwhile, only 43% expect to buy homes within the next five years. The situation raises an important question: Are Americans getting smarter and more realistic about what they can afford, or are they stuck in one giant financial cul-de-sac with no way out?

Buying A House

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Why aren't more people looking to buy?

An estimated 34% of Americans currently rent their homes. While renting isn't always a cheaper option than owning, it's usually much less costly, especially when you factor in expenses like maintenance, repairs, insurance, and perhaps the most intimidating of them all -- the down payment. But it's not just that renting a home is cheaper than owning one; it's also a lot safer from a financial perspective.

In a recent study by the Federal Reserve Board, almost 50% of Americans admitted that they'd have a hard time coming with $400 at a moment's notice. Not only does this lack of savings make it difficult to first buy a home, but it makes the prospect of owning one even more daunting. Furthermore, many younger Americans struggle to make the leap from renter to homeowner because they're saddled with student debt. The average Class of 2016 graduate racked up an estimated $37,172 in college loans, many of which originated from private lenders with higher-than-average interest rates. And it's hard to feel comfortable with the idea of a mortgage knowing you're struggling to pay off the debt you already have.

In this regard, the fact that Americans aren't jumping to buy homes means they're doing a good job of exercising caution. At the same time, those who aren't ready to give up on the dream of homeownership still have some options for getting their names on a deed.

Start saving today

Before you resign yourself to being a lifelong renter, think about some of the ways you might save money to establish a financial safety net. While small lifestyle adjustments, like cutting your cable package or skipping restaurant meals, can add up over time, a more efficient way to build savings is to make significant changes to free up cash.

If you're renting a three-bedroom space but can manage with a two-bedroom, downsizing might lower your rent by $250 a month. Over a two-year period, that's $6,000 in instant savings. Another option? Move to a neighborhood that's more affordable altogether. You might lose out on the convenience of nearby shops or a shorter commute, but if doing so slashes your rent by $300 a month without cutting down on your living space, a two-year sacrifice will give you $7,200 to put toward buying or maintaining a home.

If you're already living a modest lifestyle, you might try taking on a second job to build up cash reserves. Working a few evenings and weekends a month could put several hundred dollars in your pocket. Finally, take regular inventory at home and periodically sell the items you no longer need or use. Will you get back what you paid for them? Probably not, but it's better to bank $50 here and there than nothing at all.

Don't buy till you're ready

If you're not quite ready to give up on the idea of homeownership, then make sure you have your financial ducks in a row before taking the leap. For starters, don't buy until you have that 20% down payment. Otherwise you'll get hit with private mortgage insurance, which will only add to the cost of ownership.

Next, have a decent chunk of emergency savings before you buy a home -- ideally six months of living expenses but a minimum of three. This way, you'll have funds to dip into should you encounter a major repair when you least expect it.

Finally, don't take on too much house for your budget. As a general rule, your housing expenses should never exceed 30% of your take-home pay, but if you're coming in with other debt and minimal savings, aim to keep your costs even lower.

Though homeownership comes with a number of benefits, it isn't right for everyone. There are countless expenses you'll face when you buy a place of your own, so if your financial situation isn't great, it's better to hold off on homeownership than get in over your head.

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