Aspirational Displacement

Have you ever wanted to buy something special only to realize the cost of it is just too far out of reach? For me it was the car on the poster in my bedroom – the Ferrari F40. Ten year old me figured if I worked hard one day I could have one. Unfortunately the values have soared well beyond reason. So adult me knows that dream is gone forever.

Let’s relate my childish example to something a bit more real. For many adults that dream is to buy a home – it’s been sold to us as the American Dream. And similarly to the F40, prices have just gotten out of reach for many people to the point they are changing their goal to something else. This is the theory of aspirational displacement.

This theory shows that people are changing the milestone of buying a home to something they feel they can actually attain that still provides them a sense of progress or reward in life. Goals like a new car, a fancy purse, even Labubus or rare Pokémon cards were shown to be goals. Many also just continue to pump money into the stock market looking for any sort of return they can get.

This ties into my previous blurb about the age of a first-time home buyer being around 40 now. More and more people just feel owning a home is out of reach. Housing trends pushing more into the luxury market won’t help this. However, the high cost of construction, land, and labor mean there isn’t a profit in starter homes either. Remember, many secondary market homes are selling for less than the cost to build them in this segment. That makes it challenging to build new more affordably priced homes.

So, unless we want the dream of homeownership to become just a bedroom poster, something needs to change. Home ownership is a huge driver of wealth and should be an attainable goal.