The Cost of the American Dream in 2000 vs. Today

What the American Dream costs now vs. in 2000

“Many parts of the American Dream have become more expensive and have also become riskier,” said Hanna Horvath, a certified financial planner who writes a newsletter, “Your Brain on Money,” about the psychology behind financial decisions.

Employers previously absorbed more healthcare costs and took on more responsibility for funding workers’ retirements, while states covered a larger share of public college costs, she explained. Now, individuals and families take on more of the costs and risks.

Here’s how milestones of the American Dream compare in cost in 2000 versus now:

The cost of having a family adds another dimension to the changes in the price of the American Dream. In 2000, a middle-class family spent an estimated $17,720 annually to raise two children, equivalent to about $33,000 in today’s dollars.

That estimate covered the full range of expenses associated with raising children, including housing, food, transportation, clothing, healthcare, childcare and education, and other miscellaneous costs. For middle-class married-couple families — defined at the time as those earning between $38,000 and $64,000 before taxes — annual childcare and education expenses alone averaged about $1,310 for a child under age 3 and $1,450 for a child 3 to 5 years old.

According to a separate ConsumerAffairs report, full-time, center-based daycare for a toddler averaged $14,364 nationally in 2025. While the figures aren't directly comparable, the contrast puts today's costs in perspective: A year of toddler daycare now costs nearly as much as the annual cost of raising two children in a middle-class family in 2000.

The fastest-growing cost of the American Dream

Homeowners insurance grew faster than any other cost in this analysis, up 81% since 2000 after adjusting for inflation. More frequent climate disasters are a real part of the story, but they aren’t the whole story.

Premiums nationally rose 8.7% faster than inflation between 2018 and 2022 alone, according to the U.S. Department of the Treasury. But that’s a national average, and it looks different depending on where you live. Local climate exposure, state insurance rules, rebuilding costs and even local housing age all shape how much carriers charge in any given state.

Public college tuition wasn’t far behind homeowners insurance, rising 62% since 2000. Mortgage rates moved the opposite direction. They fell over this period, from an average of 8.05% in 2000 to around 6.60% today — a rare area where 2000 buyers had it tougher.

The 5 states where the American Dream is easiest to afford

Three of the top five states for affording the American Dream are in the West. To determine where the American Dream is most within reach, we examined seven metrics across five categories: homeownership, car ownership, college, healthcare and childcare. We compare these expenses with median household income in each state.

1. Utah

Utah ranks first in the country for affordability of the American Dream. It ranks 10th or better in six of the seven elements of our formula.

Healthcare spending per capita relative to income is lower in Utah than in any other state in the U.S. In-state tuition is third cheapest, and annual childcare costs for two children are fourth lowest. Auto insurance is comparatively inexpensive, too, with annual spending on a policy equal to just under 2% of the median household income.

• A 20% down payment on a median-priced three-bedroom home represents 12.1 months of the median household income.
• The average monthly mortgage payment takes up 26.6% of the median monthly household income.
• The average new vehicle costs 6.7 months of the median household income.
• An average annual auto insurance policy is 2.0% of the median household income.
• Average in-state public tuition at a four-year school is 8.3% of the median household income.
• Healthcare spending per capita is 7.5% of the median household income.
• Annual childcare costs for two kids average 22.5% of the median household income.

Total annual cost of the American Dream: $72,007
Median household income: $96,658

2. Maryland

In Maryland, the median household income of $102,905, third highest in the country, helps offset higher costs for some American Dream building blocks, like the average monthly mortgage payment (10th highest) and childcare costs (10th highest).

Healthcare spending in Maryland is low, though: Spending per capita amounts to 9.2% of the median household income, the third-lowest percentage in the U.S.

• A 20% down payment on a median-priced three-bedroom home represents 9.2 months of the median household income.
• The average monthly mortgage payment takes up 27.9% of the median monthly household income.
• The average new vehicle costs 6.2 months of the median household income.
• An average annual auto insurance policy is 2.6% of the median household income.
• Average in-state public tuition at a four-year school is 10.5% of the median household income.
• Healthcare spending per capita is 9.2% of the median household income.
• Annual childcare costs for two kids average 33.1% of the median household income.

Total annual cost of the American Dream: $93,531
Median household income: $102,905

3. Alaska

While homeownership costs relative to income in Alaska rank in the middle of the pack, vehicle ownership expenses, in-state college tuition and childcare costs are all among the 10 least expensive in the country.

New car costs are cheapest in Alaska because the state doesn’t have a sales tax. As a result, the average new car costs the equivalent of 6.3 months of the median household income, the sixth-lowest figure nationwide. And when it comes to insuring a car, the average premium is 10th-least expensive as a share of household income.

• A 20% down payment on a median-priced three-bedroom home represents 9.9 months of the median household income.
• The average monthly mortgage payment takes up 28.3% of the median monthly household income.
• The average new vehicle costs 6.3 months of the median household income.
• An average annual auto insurance policy is 2.3% of the median household income.
• Average in-state public tuition at a four-year school is 9.6% of the median household income.
• Healthcare spending per capita is 14.7% of the median household income.
• Annual childcare costs for two kids average 22.7% of the median household income.

Total annual cost of the American Dream: $82,348
Median household income: $95,665

4. Idaho

Idaho finishes fourth in our rankings despite having a median household income slightly below the nationwide median. This makes it difficult to save for a down payment in a state where the median sale price of a three-bedroom home is 12th highest, but things are otherwise relatively affordable.

Relative to income, Idaho ranks 10th lowest in tuition cost, ninth in lowest healthcare spending per capita and sixth for lowest spending on childcare. The average monthly mortgage payment makes up about 26% of the median monthly income, seventh lowest in the U.S.

• A 20% down payment on a median-priced three-bedroom home represents 13.6 months of the median household income.
• The average monthly mortgage payment takes up 26.2% of the median monthly household income.
• The average new vehicle costs 7.9 months of the median household income.
• An average annual auto insurance policy is 2.6% of the median household income.
• Average in-state public tuition at a four-year school is 10.4% of the median household income.
• Healthcare spending per capita is 10.0% of the median household income.
• Annual childcare costs for two kids average 24.3% of the median household income.

Total annual cost of the American Dream: $67,234
Median household income: $81,166

5. Georgia

The median sale price of a three-bedroom home in Georgia is about $300,000 — by far the lowest of any state in the top five and 15% below the national median. Even though the median household in the state makes shy of $80,000, that means saving for a 20% down payment takes around nine months — faster than in Nos. 1, 2, 3 and 4 on our list.

In-state college tuition also pushes Georgia toward the top; average tuition is third lowest and takes up under 10% of median household income (U.S. average is 13%).

• A 20% down payment on a median-priced three-bedroom home represents 9.0 months of the median household income.
• The average monthly mortgage payment takes up 28.6% of the median monthly household income.
• The average new vehicle costs 8.1 months of the median household income.
• An average annual auto insurance policy is 3.4% of the median household income.
• Average in-state public tuition at a four-year school is 9.7% of the median household income.
• Healthcare spending per capita is 10.9% of the median household income.
• Annual childcare costs for two kids average 25.1% of the median household income.

Total annual cost of the American Dream: $70,507
Median household income: $79,991

The 5 states where the American Dream is hardest to afford

On the other end of the rankings, Louisiana and Rhode Island lead the list of states where the American Dream is hardest to afford. Here’s how the bottom five compare.

1. Louisiana

Louisiana ranks last in the country for affordability of the American Dream largely because the state’s median household income is just $60,986, the third lowest in the U.S.

Consequently, costs that overall rank low nationally eat up a high percentage of Louisianans’ budgets. The average monthly mortgage payment, for example, is 15th lowest nationwide, but it consumes 32.5% of monthly household income, seventh most. 

Auto insurance is especially expensive in Louisiana because of a high rate of claims and litigation and the number of underinsured motorists. The average premium, at $4,151, is seventh highest and takes up the third-highest percentage of income of any state.

• A 20% down payment on a median-priced three-bedroom home represents 8.4 months of the median household income.
• The average monthly mortgage payment takes up 32.5% of the median monthly household income.
• The average new vehicle costs 10.3 months of the median household income.
• An average annual auto insurance policy is 6.8% of the median household income.
• Average in-state public tuition at a four-year school is 19.6% of the median household income.
• Healthcare spending per capita is 16.6% of the median household income.
• Annual childcare costs for two kids average 32.3% of the median household income.

Total annual cost of the American Dream: $74,415
Median household income: $60,986

2. Rhode Island

Rhode Island ranks second hardest in the country for affording the American Dream. Housing costs are a big reason; the state finishes third worst in the housing category. It takes over 14 months (fifth longest) for a household earning the median income to save for a 20% down payment on a median-priced three-bedroom home, and nearly a third of median household income (sixth most) goes toward the average monthly mortgage payment.

College tuition and childcare are also very expensive relative to income. Both costs are sixth highest of all states.

• A 20% down payment on a median-priced three-bedroom home represents 14.5 months of the median household income.
• The average monthly mortgage payment takes up 32.5% of the median monthly household income.
• The average new vehicle costs 7.7 months of the median household income.
• An average annual auto insurancepolicy is 2.7% of the median household income.
• Average in-state public tuition at a four-year school is 20.1% of the median household income.
• Healthcare spending per capita is 11.8% of the median household income.
• Annual childcare costs for two kids average 42.6% of the median household income.

Total annual cost of the American Dream: $98,205
Median household income: $83,504

3. Vermont

College tuition and childcare are the reasons Vermont ranks third hardest in the country for affording the American Dream. The state has the least affordable public college tuition overall and relative to income of any state in the country; the average cost of college takes up more than 23% of the state’s median income.

Childcare piles on more pressure. Annual childcare for two children costs $38,380, the second highest in the nation, or 46.4% of annual income — the highest percentage nationally. 

• A 20% down payment on a median-priced three-bedroom home represents 12.7 months of the median household income.
• The average monthly mortgage payment takes up 27.5% of the median monthly household income.
• The average new vehicle costs 7.7 months of the median household income.
• An average annual auto insurance policy is 2.8% of the median household income.
• Average in-state public tuition at a four-year school is 23.2% of the median household income.
• Healthcare spending per capita is 13.9% of the median household income.
• Annual childcare costs for two kids average 46.4% of the median household income.

Total annual cost of the American Dream: $101,249
Median household income: $82,730

4. Montana

Housing is to blame for Montana’s spot on the wrong end of our ranking. A 20% down payment on the median home sale price is just over $99,000, 10th highest in the nation, corresponding to nearly 16 months of the median household income (third most). 

Car insurance adds another squeeze. The average premium runs $4,385 a year, fifth most, and eighth most on an income basis.

• A 20% down payment on a median-priced three-bedroom home represents 15.8 months of the median household income.
• The average monthly mortgage payment takes up 29.9% of the median monthly household income.
• The average new vehicle costs 8.0 months of the median household income.
• An average annual auto insurance policy is 5.8% of the median household income.
• Average in-state public tuition at a four-year school is 10.3% of the median household income.
• Healthcare spending per capita is 12.9% of the median household income.
• Annual childcare costs for two kids average 40.0% of the median household income.

Total annual cost of the American Dream: $82,219
Median household income: $75,340

5. Hawaii

Hawaii’s median household income, $100,745, is the fourth highest in the country, but it doesn’t hold up against housing costs in the state. The median sale price of a three-bedroom home is $917,233, the highest of any state by a wide margin; that means a 20% down payment adds up to 21 months of median household income — by far the most nationally.

The average monthly mortgage payment, second only to California’s, is 35% of median monthly income, the third highest percentage in the U.S.

If there’s a bright spot, it’s the relatively low cost of car ownership. The state ranks first in the country for car affordability, thanks to low insurance costs.

• A 20% down payment on a median-priced three-bedroom home represents 21.9 months of the median household income.
• The average monthly mortgage payment takes up 35.0% of the median monthly household income.
• The average new vehicle costs 6.2 months of the median household income.
• An average annual auto insurance policy is 1.4% of the median household income.
• Average in-state public tuition at a four-year school is 11.9% of the median household income.
• Healthcare spending per capita is 9.7% of the median household income.
• Annual childcare costs for two kids average 34.4% of the median household income.

Total annual cost of the American Dream: $101,006
Median household income: $100,745

Full data

Explore the table below to see where your state ranks.

Tips for households navigating today’s costs

The costs of reaching the American Dream keep climbing, but financial experts say these moves can help:

• Raise your dependent care flexible spending account (FSA) election to $7,500 to pay for childcare costs with pretax dollars. “The limit went up from $5,000 this year, the first permanent increase since 1986,” noted Marcel Miu, the founder of Simplify Wealth Planning, an advisory firm in Austin, Texas. “Confirm your employer adopted it, since adoption is optional.”
• Shop homeowners and auto insurance every year. “Insurers frequently change how they price risk, and loyalty does not always lead to a better rate,” Horvath, the certified financial planner, said. “Compare equivalent coverage rather than choosing the lowest premium without reviewing the deductible and exclusions.”
• Revisit location as a financial decision. “Housing, childcare subsidies, state taxes, insurance and in-state tuition benefits vary,” Horvath said. “Families should compare the complete cost of living when they have geographic flexibility.”

Finally, consider our ranking just a starting point when deciding where to live. A state’s overall rank may not reflect how well it fits your household’s income and family situation.

Methodology

The ConsumerAffairs Research Team analyzed key cost metrics to compare the cost of the American Dream in 2000 versus today, and to rank all 50 states on how affordable the American Dream is now. Figures from 2000 are shown in both nominal and inflation-adjusted dollars (using consumer price index data from the Bureau of Labor Statistics) to separate real price growth from inflation. The metrics include:

• Median home price: Median three-bedroom home sale price data is from Zillow's Home Value Index, using monthly averages from 2000 and 2025.
  • Down payment amounts are calculated directly from the home price.
• Homeowners insurance: Average annual premium data is from the National Association of Insurance Commissioners. The most recent year of available data is 2022.
• Mortgage rate: The average 30-year fixed mortgage rate data is from Freddie Mac, averaged from weekly data for each year.
• New car price: Data is from the U.S. Bureau of Economic Analysis for 2000 and Kelley Blue Book for December 2025.
• College tuition: Average annual in-state tuition and fees at public four-year colleges is from the National Center for Education Statistics.
• Retirement spending: Data for average annual household expenditures for age 65-plus households for 2000 and 2024 comes from the U.S. Bureau of Labor Statistics. Total retirement savings needed assumes 20 years of retirement.
• Healthcare spending: Out-of-pocket healthcare spending per capita for years 2000 and 2024 is from the U.S. Centers for Medicare & Medicaid Services.
• Cost of raising children: Data on the annual household expense of raising two children is from the U.S. Department of Agriculture.

Using current data, the ConsumerAffairs Research Team also ranked all 50 states in seven different metrics relative to the median state household income. We excluded retirement from the state ranking because of the lack of reliable household expense data by state for people 65 and older.

Each state's overall score (out of 100 points) is built from three weighted groups:

• Homeownership (35 points) includes the number of months of median income needed for a 20% down payment on a median-priced three-bedroom home (17.5 points) and average monthly mortgage payment as a share of median monthly household income (17.5 points). Data is from Zillow and the U.S. Census Bureau.
• Car ownership (20 points) includes the number of months of median income equal to the average new car price (including state sales tax (10 points), and the average annual comprehensive auto insurance premium as a share of median household income (10 points). Data is from Kelley Blue Book, Policygenius and the NAIC.
• Other costs (45 points) include average annual public college tuition as a share of median household income (15 points), healthcare spending per capita as a share of median household income (15 points) and average annual childcare costs for two children as a share of median household income (15 points). Data is from EducationData.org, the BEA and Child Care Aware of America.

Median household income comes from the U.S. Census Bureau.

For each metric, the state with the greatest affordability received the maximum number of points, and the state with the least affordability received a score of 0. States in between were scored proportionally based on where they fell between the minimum and maximum values.

Reference policy

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Questions?

For questions about the data or if you'd like to set up an interview, please contact jrodriguez@consumeraffairs.com.