Report: Home envy is reshaping the American dream

In the digital age, social media has — for better or worse — become an integral part of our lives, influencing how we perceive ourselves and others. For Gen Z Americans, accustomed to constant online connection, this influence extends beyond personal appearance and experiences. For their part, millennials are not only sharing photos and experiences but also comparing their achievements and possessions with their peers. Among the various markers of success, home value has long been a significant benchmark. 

Fueled by the desire to keep up with others’ perceived achievements, home envy is reshaping the concept of the American Dream for these generations. The impact of social media on Gen Z’s and millennials’ perceptions of homeownership and the American Dream has some noteworthy implications — for both prospective homeowners as well as the lenders providing them with mortgages to realize that dream.

The rise of housing envy

As Gen Z members enter adulthood and the youngest millennials start to form families and settle into more traditional roles, many find themselves facing the pressure to achieve traditional markers of success, including owning a home. Platforms like Instagram, TikTok, and Facebook amplify the significance of this milestone via carefully curated posts showcasing beautifully furnished homes, inspiring interior design, and aspirational lifestyles. The seemingly constant exposure to these ‘picture-perfect’ homes can lead to feelings of inadequacy and envy, as young individuals measure their own living situations against those of their peers.

In fact, a recent study by Mphasis Digital Risk showed that 66% of young Americans routinely go online to check the value of homes belonging to friends and acquaintances. The survey of 1,386 people ranging in age of 46 years old or younger across the U.S. represented a broad spectrum of income levels, from lower- to upper-middle income. In addition, 79% of the respondents who looked up home values online said the activity left them feeling stressed, concerned or upset. 

Benchmarking home value

From luxurious penthouses to cozy suburban homes, the wide spectrum of living arrangements can provoke a sense of inferiority or aspiration, depending on one’s perspective. Mphasis Digital Risk’s survey discovered that the primary reason respondents gave for checking home prices through online searches was to use the search “as a benchmark to measure their own income and worth,” (59%), while others are trying to get “a sense of their [friends’] income” (42%).

Over half (56%) say their own home-buying decisions are “very much” or “somewhat” affected by their searches online. This benchmarking mentality places immense pressure on both generations to achieve certain financial milestones and strive for home ownership, sometimes even before they are financially ready.

Additionally, the inability to reach the same level of home value as their peers can contribute to feelings of anxiety, depression, and a distorted perception of their own achievements, rather than personal fulfillment and growth.

Navigating the American Dream

The bright spot in all of this is that 74% of Gen Z and Millennials agree that owning a home is “part of the American Dream” and while 87% think it is currently too expensive to purchase a home right now – they indicated that if mortgage rates drop back into the 4-5% range they would be willing to jump in. 

While homeownership remains a significant aspiration, it should not overshadow other essential elements of the American Dream, such as personal happiness, fulfillment, and financial stability. Both generations must resist the urge to succumb to external pressures and societal expectations, instead prioritizing their own values, long-term financial well-being, and individual journey towards success.

Embracing financial realism

Rather than becoming consumed by housing envy, Gen Z and millennials can benefit from adopting a realistic approach to homeownership. This includes understanding that lenders don’t benchmark borrowers against one another, and what an individual can afford is solely based on their financial situation. 

The importance of financial preparedness, setting achievable goals, and focusing on sustainable long-term planning will enable a borrower to be a generational home owner. By prioritizing financial stability, investing in personal growth, and seeking out reliable advice, Millennials and Gen Zs can work towards their own version of the American Dream while maintaining a healthy perspective on the role of homeownership.

By understanding the psychological implications and redefining success beyond material possessions, these generations can regain control over their aspirations and work towards sustainable goals.

Kimberly Lanham is the Senior Vice President of Client and Industry Relations at Digital Risk.