Passing the $100,000 Milestone

Since the end of World World II, one of the prime goals of middle-class Americans has been to own a single-family home. In 1965 the average price of a new house was just $20,000. By 1975 the figure had more than doubled, to $42,600. Last week the Commerce Department reported that in May the price tag on the American Dream rose to a nightmarish $101,000. It climbed by $5,100 just since April.

Rising costs may mean the end of the era of home ownership for half of U.S. families. In 1950 seven out of ten American families could afford a new, median-price home. Today higher mortgage rates and building costs mean that fewer than three in ten can pay for it. Eight years ago, the average U.S. family's monthly home payment totaled a quarter of its income. Now the figure is one-third, and it is still rising. Banks and savings and loan associations have attempted to get more Americans into homes through new methods of financing, like adjustable-rate mortgages. These keep the initial payments down, but the monthly cost can zoom higher when interest rates rise. As a result of these developments, more and more Americans seem destined to continue renting and continue dreaming.