The Unaffordable American Dream? Tracing the History of Housing Costs in the U.S.
Owning a home is an integral part of the American Dream. For many, however, it's looking like a fantasy. How did we get here?

Owning a home is a quintessential part of the American Dream, as it represents a gateway to greater stability, personal and financial security, and the potential for long-term wealth creation. However, the evolution of housing affordability in the United States has made this dream increasingly challenging for many Americans to achieve.
From the post-World War II housing boom to the 2008 financial crisis, real estate has experienced significant changes. In the early 2000s, the average price of a home was a relatively modest $119,600. Fast-forward to today, and that figure has skyrocketed to an estimated $420,700 – a staggering increase of more than 250%.
This dramatic shift in housing affordability has far-reaching implications for the nation's economy, social fabric, and the ease with which people can find a place to call home. This article will dig into the various factors contributing to this evolution, examining the foundations of affordability, economic shifts, and potential resolutions to ease housing affordability in America.
A Backstory of Housing AffordabilityHere's a summary of housing affordability in the United States over the past few decades.
The 1950s and 1960s
Following World War II, the U.S. experienced a housing boom fueled by the GI Bill and the growth of suburbs. Homeownership became more accessible to middle-class families, and housing prices remained relatively affordable compared to income levels.
The 1970s and 1980s
During this period, housing prices increased rapidly, outpacing income growth. Inflation, high interest rates, and increased demand for homes reduced affordability. However, homeownership rates continued to climb.
The 1990s and early 2000s
Housing prices surged during this period, particularly in the late 1990s and early 2000s. The dot-com boom, easy credit, and speculative investing fueled a housing bubble. Homeownership peaked in 2004 despite rising costs, with nearly 70% of American households owning homes.
The late 2000s
The housing market crashed in 2007-2008, triggered by the subprime mortgage crisis. Millions of homes went into foreclosure, and prices plummeted. Affordability improved during this time, but access to credit became limited.
The 2010s to present
The market slowly recovered after the housing crisis. Prices have steadily risen, particularly in urban areas, while income growth has remained relatively stagnant. This has led to a growing affordability crisis, with many Americans struggling to find affordable housing options. Renting has become increasingly common, especially among millennials and Gen Z.
Recent Economic Shifts Driving Housing Costs
If one thing has had a massive impact on housing affordability, it's the economy. Economic factors directly influence house supply and demand, pricing, and availability. These include:
- Economic growth - Although the U.S. economy has grown, the climb has slowed incredibly. This, coupled with the high inflation of goods and rising unemployment rate, means people barely have enough to live, let alone buy a home.
- Interest rates - From buying a house to buying a car, interest rates have climbed nonstop since the post-pandemic era. The current Federal Funds effective rate is over 5%, a sharp increase from the 0.33% recorded in April 2022. This deters many potential buyers from applying for a mortgage.
- Limited supply - The U.S. needs more than 7.2 million housing units, which has increased the prices of the few available homes.
- High inflation rate - Rising inflation affects the cost of living and increases the cost of construction materials. This has discouraged many home builders from starting construction projects, thus causing a shortage in supply.
The Modern Era of Affordable Housing Solutions
The construction industry has evolved significantly in recent years. Numerous factors have fueled this transformation, some improving housing affordability in the long run. They include:
- Use of sustainable materials: Recycled steel, bamboo, reclaimed wood, and recycled glass are examples of sustainable materials used by modern-day construction firms. In addition to conserving the environment, these materials make housing more affordable by being cheaper and more durable.
- Technology integration: Many construction companies have embraced innovative solutions like 3D printing, Building Information Modeling, and drones. These technologies improve efficiencies, productivity, and quality of construction. This lowers the overall cost of construction, which translates to more affordable housing.
- Modular construction involves using prefabricated materials, which are transported and assembled at the job site to create structures. One benefit is that it helps minimize waste, reducing the overall construction cost.
- Developing smart cities: Another trend witnessed in the construction sector is the creation of smart buildings and cities like the Hudson Yards in New York City. These areas offer better infrastructure, improved public utilities, and numerous economic opportunities. This trend can boost the locals'’ earning potential, making buying or building a home possible.
Your Path to Homeownership Starts with Jome
Yes, rising home prices and stagnant wages have made homeownership feel like an uphill climb, but there's a brighter future ahead! Programs like down payment assistance, community land trusts, and creative financing solutions are breaking barriers, making the dream of owning a home possible for more Americans than ever before.
At Jome, we're here to guide you every step of the way. Our platform connects you with trusted builders, developers, and industry experts, offering the tools to make purchasing a new construction home smooth and easy.
Whether you're a first-time buyer searching for the perfect start or looking to downsize into a home that suits your lifestyle, Jome has you covered. Explore beautiful homes on our platform today and take that first exciting step toward turning your dream of homeownership into a joyful reality. Let's build your future together!