The American Dream is dead.
I grew up in an apartment complex. Our family of seven, consisting of my mother, grandmother, four younger sisters and myself were crammed into a small three-bedroom apartment in San Leandro, CA. My mother was a legal secretary. Grandma did domestic work. The $385 rent was all that they could afford with all those mouths to feed back in the mid- to late 1970s. My mother had one dream: to own a house of her own. One with a backyard where she could put a swing set and an inflatable pool for us kids, grow fruit trees for Grandma’s canning and homemade jellies and jams and, most importantly, have the ability to call herself “a landowner.” To her, that would have been the ultimate accomplishment for a single black mother.
Houses in town averaged around $100,000 when I was growing up. Not much by today’s standards, but a fortune back then. For that kind of money, what you could get was nothing special. Just a post-World War II tract home that looked like every other house on the block with two or three bedrooms, one or two baths, a kitchen, living room and in some cases a family room. The neighborhood was working class. Some people bought their homes with money they’d squirreled away from their blue-collar jobs. Others were able to get low down, low interest VA loans in gratitude for their military service. As I stated, what they bought was nothing special, but it was theirs. That’s all Mom wanted.
Unfortunately, my mother passed away before she was able to achieve her dream, leaving Grandma to raise us five kids alone. There wasn’t a prayer that we’d ever own a home under our post Mom circumstances. Still, we dreamed. Show business was very good to me when I grew up and I was eventually able to purchase a home of my own, and my sister and I bought a little house for Grandma to spend the rest of her days. I was very lucky to get into the real estate market when I did because, like most of my friends and neighbors, I’d never be able to afford to get into my house today. Home prices have surged out of reach of most Americans.
Sometimes, for giggles, I’ll go on Zillow and check the prices of the homes in the neighborhood where I grew up. What I find never ceases to make my jaw drop. Those $100,000 tract homes are selling today for over a million dollars. As I said, they’re nothing special, yet they are commanding seven-figure price tags. More astounding still are the multiple offers homes on the market receive and the ridiculous practice of buyers writing personal letters to the sellers literally begging them to let them be the new residents of the seller’s house.
Owning your own home is the very foundation of “The American Dream.” I look at home prices, not just here in the Bay Area where I reside, but around the country and I don’t see how, short of winning the lottery or me dying and leaving them my house, my Millennial children and their contemporaries will be able to pull it off.
CNBC recently published a list of some of America’s top housing markets and the numbers are astounding. For example, they list the least affordable market as Miami where the median household income is $44,581 and the median home price is $610,000. The mortgage on a home at that price would take approximately 87.39% of the household’s income. Los Angeles ranks second on the list with a median income of $69,695 and a median home price of $975,000. That eats up 85.34% of household income. Hialeah, Florida is a little better with a $40,036 median income and a $465,000 home price. That will only take 72.55% of your paycheck. Even Newark, New Jersey is a stretch with a $38,854 median income and a $385,000 median home price that’ll eat up 77.52% of your median earnings.
If my mother were alive here in the Bay Area today, she would be despondent over what she’d need to come up with to bring her dream to life. The median salary in San Francisco is $126,117. The median home price? $1,388,000. That’ll set you back 66.56% of your income. Even Oakland is now a struggle with an $82,000 median income, $798,000 median home price that’ll devour 60.85% of your income. These prices are ridiculous. What are young people supposed to do??
The solution, in my humble opinion, is to loosen the tight home supply by building more houses and create better, more comprehensive and inclusive programs for first time home buyers. Otherwise, for these kids hoping for their share of the American Dream, they’ll either need to have a rich relative die and leave them a fortune or they’ll need to stock up on Powerball tickets and pray. That’s not the way it’s supposed to be.