Is the "American Dream" a Joke Thanks to the Bubble?

Has the "American Dream" become an American joke thanks to the real estate bubble? It sure seems like it according to this New York Times article. More evidence that the "move up" chain is breaking.

Some choice quotes:

"In the hottest markets, owners whose homes have skyrocketed in value find themselves in a frustrating paradox. They were supposed to be the lucky ones: they bought in frenzied real estate markets like New York and Los Angeles three or more years ago and have amassed hundreds of thousands of dollars on paper."

"But as they try to roll that considerable equity into a bigger home, many are unpleasantly surprised to find that the cost of real estate at the higher end has outpaced their ability to buy. For homeowners who have watched the torrid housing market create wealth as if by magic, scanning the classified ads or visiting a few open houses serves as a harsh reality check."

"Trading up "is becoming harder and harder, even for people who are technically wealthy," Mr. Boals said last week as he took a break from his duties as a stay-at-home father for his daughter, 3, and son, 16 months."

"Families have always dreamed of the extra bedroom or the larger yard. But now that their current homes have shot up in value, their expectations for a lifestyle upgrade are even higher. The problem now is that in cities like Boston, New York and San Francisco the number of people vying to move up exceeds the number of larger places for sale."

""You often think, 'Geez, I have this huge windfall,' but your neighbors and the people in the building next door have the same windfall," said Christopher J. Mayer, a professor of real estate at the Columbia Business School in New York. "There are a lot of people who want to trade up, so that's really the problem they are facing.""

"In some places prices of bigger homes are hitting records, putting them out of the reach of even those who, on paper at least, have accumulated considerable wealth."

"Incomes have not kept pace."

"One result is that homeowners who might have followed the traditional path from starter home to dream house in a few years are now deferring the dream."

"Many families are shocked at how little their newfound wealth will buy."

"Some buyers forge ahead, but end up taking out riskier mortgages simply to afford the monthly payments."