Home ownership has been a hallmark of the American Dream, the backbone of our economy, and the greatest generator of wealth for individuals and families.

The most recent recession has prevented millions from entering the housing market. For those who entered the market and sometimes opted for bigger properties than they could afford, there was the disaster of foreclosure, which effects  your credit immediately and your wealth over the long-run, according to a new report.

For a majority of Americans, a house is the single largest asset. It tends to appreciate in value, but not indefinitely as the housing bubble taught us. Following the bursting of the housing bubble, there is a larger share of Americans who lost their houses and are now renting. With incomes relatively flat, bad credit, and difficulty saving, homeownership is no longer a priority. Home values are now rising, and no doubt many of these renters wish they could participate in the housing market.

Some 90 percent of metropolitan areas housing markets have seen a decline in homeownership rates, according to a survey by the National Association of Realtors. Nationwide, according to the Census, in the mid-2000s home ownership rose to about 70 percent, but has fallen back to 63.7 percent – the lowest in 25 years. This doesn’t count millions of houses in foreclosure or with negative equity which means that real homeownership rate is actually lower.

Meanwhile, renting is near an all-time high. As not just those who lost their houses, but generational shifts are driving potential homebuyers to stay away from the commitment of buying a house. Baby boomers are downsizing and millennials are struggling with a trillion in student loan debt.

What are the long-term implications if these trends hold?

CNBC reports:

"Homeownership plays a pivotal role in the U.S. economy and has historically been one of the primary sources of wealth accumulation for middle-class families," said Lawrence Yun, chief economist for the Realtors.

"Unfortunately, due to an underperforming labor market, insufficient housing supply and overly stringent underwriting standards since the recession, homeownership has plunged to a rate not seen in over two decades," Yun added. "As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen."

The homeownership rate rose to a high of more than 69 percent during the housing boom in the mid-2000s and has now fallen to 63.7 percent, the lowest in 25 years, according to the U.S. Census. With millions of homes either in the foreclosure process or in a negative equity position, the real homeownership rate is actually lower.

There is also a new asset class of single-family rental homes, the outgrowth of the housing crash, when investors swooped in and bought up millions of distressed properties.

This provided even more options and incentives for people to rent, especially those with families who want to live in good school districts. Now, as home prices rise again, none of these renters are now experiencing any of the wealth growth their homeowner neighbors are; they are instead seeing increases in monthly rent charges, which detracts from wealth.

Realty experts connect low homeownership rates to the much-bandied wealth gap. Home ownership is lowest in the largest metropolitan markets like San Diego, Los Angeles and New York City, where the gap between the rich and poor is particularly evident. Renters abound in these areas and they typically have much lower net worth than homeowners. So for instance, a typical homeowner in San Jose, Calif., enjoyed an increase of $210,671 in housing wealth, while renters were likely exposed to annual rent increases.

The effects of the recession continue to ripple across our economy leaving complex impacts on both our wallets and our psyches. The wealth gap argument gets dumbed down too frequently to “the rich are getting richer and the poor getting poorer” with the rich starring as the villains. Progressives would have us to believe that wealthy people are taking unequal advantages to grow their pots of gold on the backs of the poor and working classes.

This argument that lower homeownership is contributing to the wealth gap by rewarding homeowners but penalizing renters is an interesting one. The solution is to create a healthy economy where more people have the incomes to get into the housing market.   When incomes rise, Americans have more income to purchase. When the economy is producing good jobs, it builds our confidence to venture into a long-term mortgage rather than a short-term rental agreement. It should also be noted that high college loan debt makes it more difficult for young people to get ahead and purchase housing.

And let’s not forget that miss-guided government policies go us into this mess. Relaxed lending and borrowing practices dating as far back as the 1970s contributed to the collapse of the housing market. The economy is now trying to adjust to a woeful new normal that we hope will be temporary. We don’t need another public solution, but we need free-market policies that allow the economy to correct itself. We also must make sure that bankers are not forced by government policies to make loans to people who simply are unlikely to be able to repay them.