Is the American Dream Still in Reach?

An AOL/Zogby survey released earlier this week shows that more than half of all Americans believe that homeownership is still attainable for most citizens, while nearly as many (43%) spend more than 30% of their income on housing. Furthermore, 30% of Americans work paycheck to paycheck to cover these costs. Interestingly, spending this much of your income on housing makes you “cost burdened,” according to HUD.

Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.

In reality, homeownership may be attainable for the majority, but the options may be very limited. According to the 2006 American Community Survey, the median household income in Washington was $52,583 per year. Using this income estimate and assuming a 20% down payment and interest rate of 5.875%, you would be able to purchase a $275,000 home and not be cost burdened.  Specifically, you’d be able to purchase any one of the following “dream” homes:

A “sweat equity” 4 bedroom value in Seattle:
828 S. Donovan St., Seattle
4 br/2 ba, 2,460 sq.ft.
Price $255,900 ($104/sq.ft.)
MLS 28029387

A “Peek-a-boo” lake view in Seattle:
9624 56th Ave S.
3 br/1.75 ba, 1,340 sq.ft.
Price: $275,000 ($205/sq.ft.)
MLS 28028722

A 666 sq.ft.  1 room charmer in Bellevue:
281 112th Ave SE #4
1 br/1 ba, 666 sq.ft.
Price $259,000 ($389/sq.ft.)
MLS 28042269

An updated “room” in Kirkland:
211 Kirkland Ave #519
0 br/ 1 ba, 476 sq.ft.
Price $274,950 ($578/sq.ft.)
MLS 28025379

And even more, despite all the recent headlines about sinking home prices, nearly one third (31%) of Americans still feel their home is worth more than it was last year and more than half (56%) do not think it will be worth less in five years. I love this about America–despite the erratic financial markets, the skyrocketing gas prices, and yes, even rice shortages, there is always hope…one can always hope.