These Are the Only People Who Can Afford the American Dream

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If you’ve paid any iota of attention to the ebbs and flows of the American economy, you know that the “American Dream” — the idea that given enough hard work and dedication, you can become a self-sustaining individual with a house and family — is out of reach for most. That description of the American Dream varies from person to person, but the general idea is that you can get the basics of a happy life if you try hard enough. But as we’ve seen over the past couple of decades, it’s an ideal that simply isn’t in the cards for much of middle-class America.

As for why it’s out of reach? There are many reasons. Incomes have stagnated, as wage growth has been choked. Jobs have been sent to foreign countries to capitalize on cheaper labor, and automation and technological gains have also led to job losses. Globalization is the biggest part of it, but there have also been regulatory and commercial changes that have significantly impacted the American economy.

Essentially, the prices of almost everything (front rent and mortgages to food) have gone up with time, and wages haven’t kept up. Purchasing power has eroded. And now, the price tag of the American Dream is higher than many people can afford. Thanks to a new study from The Red Pin, a Canadian real estate listing site, we now have an idea of the exact dollar amount required to achieve it, and who, exactly, earns enough to make it.

The American Dream, in Dollars & Cents

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Infographic via The Red Pin

As you can see from the above graphic, the total cost of the American Dream — per The Red Pin’s calculations — comes in at more than $3,500 per month. That’s a considerable amount, which means that a household would need to earn more than $42,500 annually (pre-tax) to get into the conversation. And, naturally, there is an incredible amount of variability in the associated costs from household to household, and location to location.

If you dig further into the study, The Red Pin does list out several cities in which the American Dream is much easier to attain. For example, if you’re striving to have it all in New York City or San Francisco, you’re going to have an incredibly tough time. But if you set your sights on other cities in the Midwest, for example, you’re suddenly in the ballpark.

But back to that $3,500 number — with two earners in a household, it’s achievable. Again, however, you have to account for who, where, and what they’re trying to earn. The average household earns around $54,000 per year, per government data, to put things into perspective.

Who Can Afford It?

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Infographic via The Red Pin

The chart above paints somewhat of an ugly picture, with only a handful of people (again, on average) able to afford the components to piece together the American Dream. If you’re a middle-aged man — specifically, white or Asian — you’re in the clear. Everybody else? The cards are stacked against you.

Clearly, there’s a lot of information packed into this relatively simple bar graph. It doesn’t take into account, however, the many factors that play into income inequality, access to education, environmental hurdles, etc. That would require a graph and report hundreds of pages long, so keep in mind that this chart is just taking the averages. There are plenty of people who are doing quite well and beating the averages. There are lots who are falling behind, however, as well.

There’s one thing that’s obvious from The Red Pin’s work, though: Things really only look bright for men between the ages of 35 and 64. Younger, or older than that? Not so much. Not white, or Asian? Tough luck. And that goes for women of all ages and races as well.

This article originally appeared on The Cheat Sheet.  

Image: Andrew Rich

The post These Are the Only People Who Can Afford the American Dream appeared first on Credit.com.

Buying a Home Is Still an American Dream — Here’s How to Make It a Reality

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Think millennials don’t care about owning a home? Think again.

The latest U.S. Housing Confidence Survey (HCS) confirms that this generation, along with a growing percentage of non-white Americans, has more confidence in the housing market than the rest of the population does.

Turning that confidence into action could lead to a great future for the housing industry. And despite the current market’s difficult climate, gaining approval to become a homeowner is simpler than one might expect.

Confidence vs. Reality

The HCS found that 65% of Americans aged 18 to 34 believe the American Dream goes hand in hand with owning a home. This is just slightly higher than the 64% of baby boomers (age 65 and up) who responded similarly. Meanwhile, 70% of Hispanic respondents, 64% of Asians, and 63% of African-American participants agreed with the idea.

That’s a lot of hope for an industry that appears to some as increasingly more difficult and complicated to enter. Rents are rising as incomes are staying flat, and this is keeping millennials in rental situations for longer than previous generations, as they postpone making major life decisions and lack the funds for a down payment.

But even in the midst of chaotic financial markets and wavering confidence from investors and consumers, the U.S. housing market has stayed resilient. Explains Terry Loebs, founder of research firm Pulsenomics LLC, “Housing confidence has increased in every metro area surveyed over the past two years and fueled the market recovery.”

And according to Zillow’s Chief Economist, Dr. Svenja Gudell, today’s optimism could help create tomorrow’s stability. “These Americans represent the next generation of U.S. homeowners, and for homeownership to eventually become a reality, it has to start as a dream.”

Take the First Steps

If you’re an aspiring homeowner (millennial or otherwise), you can take a couple quick steps to see what your odds are of landing that dream home in the first place.

The most important first step is to check your credit score. You can check two of your credit scores for free every month on Credit.com. Your credit score will determine whether you can get approved, as well as your interest rate and how much house you can afford. The pre-approval process consists of providing necessary documentation (e.g., pay stubs, tax returns, W-2 forms) to your lender.

Depending on your results, once you check these two items off your to-do list, you’ll be that much closer to transforming your homeowner dreams into reality.

More on Mortgages & Homebuying:

Image: Monkey Business

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