investing in usa

Did Housing Destroy the American Dream?

Let me first say this, I love the USA. Are we perfect? No. But we are pretty darn good and always trying to improve the American Dream. If you travel and get to know other countries, there is really no perfect society and each country has its own unique history, geography, religions, demographics and resources that make it unique.

I have great optimism for the US. We will have challenges, but I believe in the big picture over the long run, the US will thrive in the coming years.


The American dream may not be dead, but it needs to be defined given todays realities. And the main one I want to focus on is housing.

Homes have become less affordable: In 1960, approximately 68 out of 100 Americans could afford a home, but now only around 43 out of 100 can afford one.

That marks the highest debt-to-income ratio since 2007, meaning the market is the least affordable for Americans in nearly two decades. The lack of affordability is widespread across the country, with prices rising in about 98% of counties when compared to historical average

Here are 5 reasons why housing has become so expensive in the US:

  1. Low interest rates. When interest rates are low, it becomes more affordable for people to borrow money to buy a home. This increases demand for housing, which drove up prices.
  2. Low inventory. The number of homes for sale has been declining in recent years. This is due to a number of factors, including the slow pace of new construction and the increasing popularity of homeownership.
  3. Investor demand. Investors have been buying up homes in recent years, both to rent out and to flip for a profit. This has also contributed to the rising demand for housing and the subsequent increase in prices.
  4. Rising construction costs. The cost of building a new home has been rising in recent years, due to factors such as rising land prices and the increasing cost of materials. This has made it more expensive for builders to construct new homes, which has also contributed to the rising cost of housing.
  5. Changing demographics. The demographics of the US population are changing, with more millennials and seniors entering the housing market. This has increased demand for housing, particularly in urban areas.

These are just some of the reasons why housing has become so expensive in the US. It is a complex issue with no easy solutions. However, by understanding the factors that are driving up prices, we can start to develop policies that will help to make housing more affordable for everyone.

Here are some additional factors that may be contributing to the rising cost of housing in the US:

  • Government policies. Some government policies, such as zoning regulations and tax breaks for homeowners, may be making it more difficult to build new housing and more expensive to own a home.
  • Technological changes.Technological changes, such as the rise of remote work, are allowing people to live in more expensive areas. This is increasing demand for housing in those areas, which is driving up prices.
  • Globalization. The globalization of the economy is making it easier for people to move to the US, which is increasing demand for housing in some areas.

The rising cost of housing is a significant problem for many people in the US. It is making it harder for people to afford to buy a home, and it is also making it harder for people to rent a home. This is a problem that needs to be addressed, and there are a number of things that can be done to make housing more affordable.

Redefining the American Dream

I am not the first to say this, but it appears that younger generations are re defining what the American Dream is and means to them. And after many years of studying personal finance and being on my own True Wealth journey, this ultimately needs to be defined by each individual and family. And it appears this is especially true for housing and home ownership.

A Modest Home

Perhaps we can make it trendy to not have a perfect home, but to be proud of any home you may live in. And to make the most of it. The reality is that a home is a very expensive activity and need to balance home costs with other living costs. When considering where to live, it may also be time to factor in climate change into real estate investing.

Basic Ingredients

I think the American Dream used to be home ownership, a couple cars, a couple kids, a steady job and after 30 years of working, a relaxing retirement.

But here is the problem, since 2000, broadly speaking, prices have risen 74%. Housing has increased broadly by close to 70%. Childcare up 110%. College tuition up by approximately 175%, etc.

The American Dream costs money, lots of it. And salaries have simply not kept up.

See related: Other ways to invest in real estate:

Optimist by Nature

This is not doom and gloom. Let’s be honest, the American Dream has never really been easy or a cookie cutter type of thing. We do still live in a land of opportunity, but each person’s path will look a little different. I still believe in the fundamentals of the American Dream and wealth building: steady employment in something we can tolerate, paying yourself first and straightforward investing. Getting these 3 ingredients right will most likely set someone up for success over the years.

What is Your Definition?

Perhaps we need to pay less attention to the media or social media messaging and really decide for ourselves, what is most important and what is our American Dream? Perhaps for some this does not include home ownership. Or perhaps we can downsize and live in a smaller more affordable property. Not everything needs to be a McMansion.

The average house for a family of 4 decades ago was 1400 square feet. Now people routinely see homes with huge amounts of square footage that cost more to maintain, more in utilities, taxes, etc.

A Money Viking True Wealth Vision

For me I believe the American Dream can be summed up this way in the modern era.

  • Explore opportunities to better yourself and your family
  • Focus on improving health and learning
  • Apply new knowledge to improve finances, relationships and wealth building
  • Be a stakeholder in some aspect of society, whether this be through owning index funds, REIT’s, a small business, a modest home, etc.
  • Be a member of society that trys to add value to others lives
  • Be an informed citizen that seeks compromise and pragmatic approaches to problems


Leave a Reply

Your email address will not be published. Required fields are marked *