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Going to an elite school, landing a good job and buying a home may have once seemed like a sure path to achieving the American Dream. But according to Scott Galloway, a renowned marketing professor at NYU’s Stern School of Business, that path no longer works.
The reason, he explains, is simple: Homes have become so expensive relative to earnings that even graduates with eye-watering salaries can’t afford them.
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“When I got out of business school, the average salary was $100,000. I went to a quote-unquote elite business school … The average house in San Francisco cost $280,000, so 2.8 times the MBA salary,” Galloway recounted in a recent appearance on the Jay Shetty Podcast.
“Now, the kids at Haas — still an elite business school, incredible compensation, average $200,000 right out of business school — but the average home in San Francisco is $2.1 million.”
In other words, while elite graduates are earning more than previous generations, the sheer surge in home prices has left them far behind.
Galloway believes the problem stems from the reluctance of existing homeowners to allow new construction in their neighborhoods.
“As soon as you have a house, you become very concerned with traffic, and you start showing up to local review meetings and making sure no new housing is built, which is great if you already own a home,” he explained.
A recent Zillow report estimates the U.S. faces a shortage of 4.7 million homes.
Dream, hallucination or fantasy?
Galloway has a blunt assessment of the situation.
“I think young people have given up on the American dream of owning a home,” he told Shetty.
He pointed out that conditions have shifted dramatically against new homebuyers since the COVID-19 pandemic.
“Pre-pandemic, a house is $290,000. Post-pandemic, it’s $420,000. Interest rates [went] from 3% to 7%, [the] average mortgage went from $1,100 to $2,200,” Galloway noted. “All of a sudden, the American dream has become a hallucination, a fantasy.”
Research suggests that over the years, homeownership has indeed become substantially more difficult for Americans.
According to a 2024 Zillow study, buyers now need to earn more than $106,000 annually to comfortably afford a typical U.S. home. This calculation assumes spending no more than 30% of income on the monthly mortgage with a 10% down payment. In 2020, that income threshold was only $59,000 — meaning the required earnings have jumped by 80%.
Zillow also noted that in 2020, the $59,000 needed to buy a home was actually less than the U.S. median household income of $66,000 at the time. That’s no longer the case. Today’s required $106,000 is well above the median.
“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains,” Zillow Senior Economist Orphe Divounguy said in the report.
How to get on the real estate ladder — starting with $100
Given these challenges, Galloway noted that for young people, saving for a home today ‘“is almost impossible.”
Yet despite the hurdles, real estate remains a popular investment choice for those looking to hedge against rising living costs. When inflation goes up, property values often climb as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to rise, providing landlords with a revenue stream that adjusts with inflation.
While buying an entire house may feel out of reach, it’s now easier than ever to start investing in real estate thanks to crowdfunding platforms like Arrived.
Backed by world class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.
The process is simple: Browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving positive rental income distributions from your investment.
Another option is Homeshares, which gives accredited investors access to the $35 trillion U.S. home equity market — a space that’s historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
With risk-adjusted target returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets.
Read more: You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how
Galloway’s simple hack: ‘forced savings’
With so many enticing products and services vying for consumers’ attention, Galloway pointed out that “it is nearly impossible for a young person to save money if it comes through their hands.”
His solution? Something he calls “forced savings” — money you never see, because it’s invested automatically.
He specifically mentioned using “the Acorns app that rounds up and puts the money automatically into a low-cost index fund.”
Acorns is a popular app that does exactly that. When you make a purchase on your credit or debit card, Acorns automatically rounds up the price to the nearest dollar and invests the difference — the coins that would wind up in your pocket if you were paying cash — into a diversified portfolio of ETFs.
Buying a coffee for $3.40? The app rounds it up to $4 and invests the extra $0.60. Over time, those small amounts can add up — especially if you’re consistently spending and saving.
It’s a simple, set-it-and-forget-it way to build wealth from money you might not even miss — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
