A Struggle for the American Dream
In the charming town of Petaluma, California, a Victorian house that once stood at $175,000 in the late ‘70s has seen a staggering increase in its value. While inflation could explain a rise to $997,000, (a value calculated from today’s dollar value) the reality is far more daunting — the house is now listed for $4 million. This phenomenon is not isolated; house after house tells a tale of overinflated housing prices far above natural inflation levels that outpace the growth of American wages.
Our economic landscape has witnessed an unsettling trend where housing costs, fueled by factors like high demand, limited supply, and speculative investments, have surged far beyond the reach of the average American.
The result is a large gap between soaring housing prices and the stagnation of income levels. This, in turn, throws up insurmountable barriers to homeownership, making it increasingly challenging for individuals and families to step onto the property ladder.
To put it into perspective, the average salary needed to buy a home in America now hovers around $120,000 — a figure that goes beyond middle-class and median income boundaries. 20 years ago, my parents were able to buy a house with the combined salary of a teacher and an office manager. I don’t see that happening today.
Among those who said saving for a down payment was difficult, the most cited hurdles were high rent (40%), car loan (39%), credit card debt (38%), student loans (35%), and child care costs (19%). 27% percent of successful first-time buyers skipped rent and moved directly from a family member’s home into homeownership. Living with your parents is not a luxury that everyone has.
(https://www.nar.realtor/blogs/economists-outlook/millennials-still-underperforming-amid-gains-in-homeownership-rate)
This misalignment between earnings and housing costs paints a grim picture for those aspiring to achieve the American Dream of homeownership.
Adding to the complexity is the trend of companies in fierce bidding wars to acquire properties, often with the intent to convert them into vacation homes or rental units to create passive income, while renters pay the mortgage for them. This influx of corporate investors into the housing market exacerbates what can only be described as a crisis of renters’ lock.
As a consequence, individuals and families face fierce competition for even basic rental properties, leading to increased rental prices and limited housing options.
In response to the escalating housing crisis, some cities have taken proactive measures to address the imbalance. Recently, Los Angeles has implemented laws restricting corporations from purchasing single-family homes, aiming to curb the influence of corporate entities in the residential real estate market. This legislative move is prioritizing individual and family buyers over corporate interests. While such initiatives are steps in the right direction, we need to see broader, systemic changes to ensure sustainable affordability and accessibility in the housing market nationwide.
I am tired of the notion that the struggle to afford a home is rooted in a lack of effort, I am tired of it being normalized to have multiple roommates well into your thirties to get by.
It’s evident that the disconnect between wages and housing costs is a structural issue. Despite diligent work, many find themselves trapped in a cycle where no amount of hard work seems sufficient to bridge the growing gap.
This dream will perish for many as we devolve into a gap so large we become comparable to third world countries.
It is not that we are not working hard enough. Is that no matter how hard we work, it will never be enough. It is not because we buy coffee in the morning.
We need to consider the role of legislation in shaping a housing landscape that serves the needs of communities rather than perpetuating the challenges posed by corporate dominance. We need to do a gut check, and begin addresses housing policies, income inequality, and the role of corporate entities in shaping the housing landscape. Only through comprehensive solutions can we hope to restore balance and make the dream of owning a home a reality for more Americans.
