The American Dream
Home ownership used to be one of the most vital parts of achieving the “American Dream.” However, with rising home costs and wages that are struggling to keep up with inflation, many families are forced to hold off on purchasing their very first home until much later in life or go without home ownership altogether. What used to be an accessible milestone has quickly become a Herculean feat only few can actually accomplish.
The American Dream as a concept has existed long before the phrase actually became popular when used by historian James Truslow Adams in his 1931 best-selling book “The Epic of America.” In short, it’s the opportunity for everyone to achieve a better life through hard work and became one of the capstone factors that gave the United States a competitive advantage over other countries.
For the longest, home ownership and education were the most traversed paths to achieve the American Dream. The idea was that you’d go to college, get an advanced degree, join the workforce, get married, have a couple of kids, and buy a house with a white picket fence. That was the ultimate goal for decades until liberal movements that focused on addressing discrimination, inequity, sexism, and pay discrepancies forced that goal to be challenged and oftentimes completely abandoned.
Each generation, family, and person has their own definition of the American Dream and the steps to achieve it have become increasingly convoluted and difficult to actually attain over time. Wives used to be stay-at-home moms while their husbands would go out into the workforce to make the bacon. With most households now needing two incomes to simply stay afloat, children are spending more and more time in daycare centers and public schools.
It’s also become increasingly difficult to purchase a home. Just a few decades ago, a young couple would be able to purchase a starter home for less than $150,000 that could sustain them until they outgrew the space. Now, starter homes, similar to the middle class, are evaporating into thin air and are very difficult to find in desirable areas to live.
The price of land lots, building materials, labor rates, and even government permits and fees have risen exponentially, forcing builders to raise sale costs just to break even. The average price of a home in 2024 was upwards of $420,000. Normal to small sized homes can go for even more than that depending on the location and demand. Bidding wars can turn a moderately priced home into an overpriced one in the blink of an eye.
Everywhere you turn, there are new subdivisions being built with signs that advertise ridiculous starting prices or only give buyers the option to lease. Even worse are the stand-alone mansions that crop up in random areas and are listed for over $1,000,000 on Zillow or Redfin. The homes are no doubt beautiful, but it makes you wonder why developers are choosing to build elaborate mansions with insane mortgages instead of more affordable homes for the average American.
If you’ve never been through the process of purchasing a home, there’s a lot of fine print, fees, and hidden facts that people don’t tell you about. Learning what an escrow account does, what it pays for, how it factors into your monthly payment, and what to do if you ever receive a random, large check from that account might not be useful until year two of being in your home, but can help save you from years of financial pain.
Closing costs always get portrayed as the big, bad wolf of buying a home until you’re faced with paying for city and county taxes, property insurance, and random things breaking that costs hundreds of dollars to fix. If you factor those necessary payments in with a monthly mortgage that’s at the very top of your budget, it’s understandable why roughly 21.93% of American households are house poor.
Being house poor means spending more than 30% of your monthly income on housing. Some households even spend closer to 50% and stretch their financial situation beyond belief. Spending this much on just housing is never advised because you never want to run out of money to cover other vital expenses like food, toiletries, credit card payments, or car payments. You also never know what emergency might pop up out of the blue.
While it’s nice to view the ultra modern homes that have beautiful aesthetics on Pinterest and Instagram, it’s important to not chew off too much house…and just because you can make the monthly payment, doesn’t necessarily mean you can afford it. Never stretch yourself too thin for the sake of purchasing a home. It is okay, and oftentimes better, to just rent if your finances cannot support buying a house.
If you’re serious about wanting a home you can call your own, start researching well in advance how much money it’ll take, what areas you’d like to live in, what are your non-negotiables, and what can you live without. Create an action plan so you save more than enough money for closing costs, initial maintenance, furniture, and moving expenses.
Oh, and speaking of furniture, please don’t feel the need to go into massive debt just to put items in empty rooms. Sometimes you have to live in a space for a while and slowly accumulate things you love to have a clear design plan. If you’re a newlywed couple, it’s more important to start your new life together on solid financial footing than to go overboard in trying to fully furnish a whole house immediately.
For many people, home ownership is a pipe dream that doesn’t even feel attainable anymore. Qualifying for decent mortgage rates and finding a home within budget is difficult in today’s landscape, but despite these challenges, it’s important to create your own version of the American Dream and work each day to get one step closer.
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Signed,
Jessica Marie
