Trending Now :

What Does the Hot Inflation Report Mean for the Housing Market How Do You Build Wealth: Invest in Yourself Times Up for Programmed Money Biggest Financial Crimes: Countrywide Quantitative Tightening, Inflation, & More The Stock Market Is On Sale Investors Need to Netflix and Chill Credit Card Fixed-Interest Loans: Explained Are You Money Smart? Build Your Credit for Free Filing Your Taxes in 2022 Credit Cards that Offer 2% Cashback on All Purchases Navient Ordered to Cancel Student Loans U.S. Mortgage Interest Rates Soaring Two Big Banks Cut Overdraft Fees 2022 IPO DRAFT CLASS: Ranking the Top 10 Prospects Re-Drafting the 2021 IPO Draft All You Need to Know about Buy Now Pay Later companies Credit Card Sign-Up Bonus or SUB The Best Credit Card for the Middle-Class Make An All-cash Offer with No Cash Capitalism Always Ignores Politics All You Need to Know about the Financial crisis of 2007-2008 American Families Face Serious Rent Burden Savings Is An Expense You Can’t Build Generational Wealth If You Are Broke IT’S OFFICIAL: Robinhood is a Meme Stock All You Need to Know About Biden Mortgage Modifications & Payment Reductions Apple Card 2nd Year Anniversary: Should You Get It Now Wells Fargo to Pull Customers Personal Lines of Credit The Rise of Individual Investors The US Housing Market Is Booming. Is a Crash Ahead? Financial Literacy: How to Be Smart with Your Money Non-Fungible Token (NFT):EXPLAINED SKYROCKETED CEO PAY & LONG LINES AT FOOD BANKS Amazon Workers Want to Unionize Another Major City Piloted Universal Basic Income The New Bubble: SPACs SUBMIT YOUR PPP ROUND 2 APPLICATION BEFORE MARCH 31ST Robinhood-GameStop Hearing & Payment for Order Flow Guess Who’s Coming to Main Street Democratic Senators Say No to $15 Minimum Wage BEZOS OUT! President Biden Most Impressive Act Went Unnoticed: CFPB Biden $1.9 Trillion Stimulus Package 2021 IPO DRAFT CLASS: Ranking the Top 10 Prospects $25 Billion Emergency Rental Assistance NO, TESLA IS NOT WORTH MORE THAN TOYOTA, VOLKSWAGEN, HYUNDAI, GM, AND FORD PUT TOGETHER AMAZON TO HAND OUT ITS WORKERS $300 HOLIDAY BONUS Where Does the American Middle-class stand on Student Debt Relief? Joe Biden’s Economic Plan Explained 4 TYPES OF BAD CREDIT REPORTS AND HOW TO FIX THEM What Is the Proper Approach to Not Buy Too Much House? FISCAL STIMULUS PLANS STILL IN ACTION How to Pick Investments for Your 401(k) 10 Simple Ways to Manage Your Money Better All You Need to Know about Reverse Mortgage All You Need to Know about Wholesale Real Estate Credit card Teaser Rates AVERAGE CREDIT CARD INTEREST RATE SURGES TO 20.5 Percent Trump Signs 4 Executive Orders for Coronavirus Economic Relief The Worst American Economy in History WHY CREDIT CARDS MINIMUM PAYMENTS ARE SO LOW? 10 BIGGEST COMPANIES IN AMERICA AND WHO OWNS THEM White House Wants to End the Extra $600-A-Week Unemployment  10 Countries That Penalize Savers FEWER CREDIT CARD BALANCE-TRANSFER OFFERS ARE IN YOUR MAILBOX Private Payrolls and the Unemployment Rate SHOULD YOU BUY INTO THE HOUSING MARKET RESILIENCY? WILL WE GET A SECOND STIMULUS CHECK The Child Tax Credit and Earned Income Tax Credit THE RETURN OF BUSINESS CYCLES Should You Request a Participant Loan or an Early 401(k) Withdrawal? Homebuyers Should Not Worry about Strict Mortgage Borrowing Standards The Potential Unintended Consequences of Mortgage Forbearance All Business Owners Need to Know about the Paycheck Protection Program 10 MILLION UNEMPLOYMENT CLAIMS IN TWO WEEKS HOW WILL THE GLOBAL MIDDLE-CLASS RECOVER FROM A SECOND ECONOMIC RECESSION IN A DECADE? WILL U.S. CONSUMERS CONTINUE TO SPEND? HOW’S YOUR 401(k) PRESIDENT TRUMP SIGNS $2.2 TRILLION CORONAVIRUS STIMULUS BILL MIDDLE-CLASS NIGHTMARE: MORE THAN 3.3 AMERICAN FILED FOR UNEMPLOYMENT CLAIMS IN THE US LAST WEEK. LAWMAKERS AGREED ON $2 TRILLION CORONAVIRUS STIMULUS DEAL CORONAVIRUS STIMULUS PACKAGE FAILED AGAIN IN THE SENATE APRIL 15 (TAX DAY) DELAYED DEMOCRATS AND REPUBLICANS DIFFER ON HOW $2 TRILLION OF YOUR TAX MONEY SHOULD BE SPENT YOU CAN DELAY MORTGAGE PAYMENTS UP TO 1 YEAR, BUT SHOULD YOU? 110 Million American Consumers Could See Their Credit Scores Change The Middle-Class Needs to Support Elizabeth Warren’s Bankruptcy Plan The SECURE Act & Stretch IRA: 5 Key Retirement Changes 5 Best Blue-chip Dividend Stocks for 2020 9 Common Bankruptcy Myths 401(K) BLUNDERS TO AVOID Government Policies Built and Destroyed America’s Middle-Class & JCPenney Elijah E. Cummings, Esteemed Democrat Who Led the Impeachment Inquiry into Trump, Dies at 68 12 Candidates One-stage: Who Championed Middle-Class Policies the Most WeWork: From Roadshow to Bankruptcy Stand with the United Auto Workers Formal impeachment Inquiry into President Donald Trump America Is Still a Middle-Class Country SAUDI OIL ATTACKS: All YOU NEED TO KNOW THE FEDERAL RESERVE ABOLISHED BUSINESS CYCLES AUTO WORKERS GO ON STRIKE Saudi Attacks Send Oil Prices Spiraling REMEMBERING 9/11 What to Expect from the 116th Congress after Their August Recess Should You Accept the Pain of Trump’s Trade War? 45th G7 Summit-President Macron Leads Summit No More Upper-Class Tax Cuts Mr. President! APPLE CARD IS HERE-SHOULD YOU APPLY? THE GIG ECONOMY CREATES A PERMANENT UNDERCLASS 5 REASONS IT’S SO HARD FOR LOW-INCOME INDIVIDUALS TO MOVE UP TO THE MIDDLE CLASS ARE YOU PART OF THE MIDDLE CLASS? USE THIS CALCULATOR TO FIND OUT? WELLS FARGO IS A DANGER TO THE MIDDLE CLASS The Financialization of Everything Is Killing the Middle Class
10 HOUSING CHALLENGES FACING THE MIDDLE CLASS
American Middle Class

10 HOUSING CHALLENGES FACING THE MIDDLE CLASS

The estimated reading time for this post is 185 seconds

10 housing challenges facing the middle class despite a decade-plus economy recovery.  Historic low-interest rates, lax underwriting procedures, and tax credits and subsidies ushered the last housing bubble, and eventually, the housing crisis.

A decade-plus into the current economic expansion, the housing market, in most cities, has reached its pre-crisis peak, which presents many severe challenges for those who want to enter or re-enter the housing market.

Here are 10 challenges facing middle-income Americans and how to overcome them:  

Affordability

 According to Zillow, the median price of homes currently listed in the United States is $289,000 compared to $148,000 in January 2012.  The median listing price in San Francisco and Miami are $1.3 million and $475,000, respectively. Although the interest rate on a 30-years fixed mortgage is at 3.50 percent, it is difficult for the middle-class buyers to get approved for such a large amount.      

Down Payment & Closing Costs

 Using the median listing price of $289,000 mentioned above, a potential FHA buyer will need at least $18,785 for down payment ($289,000×0.035=$10,115) and closing costs ($289,00×0.03=$8,670).  The majority of those who are in the middle-class don’t have that large sum of money at their disposable. Matter of fact, a new study by Bankrate found that 21 percent of working Americans are not saving any money for retirement or emergencies at all. 

Credit

Auto loan default is putting stress on credit scores.  According to Experian, a record number of Americans are three months behind on their car payments.  The Federal Housing Administration (FHA) requires a minimum credit score of 580 and a 3.5 percent down payment for them to guarantee any loans issued by banks, credit unions, and online lenders.  Keep in mind credit scores that low will make the loan more expensive.    

Location

The overuse real estate adage, location, location, and location reigns true here.  According to Zillow, the median price of homes currently listed in Lubbock, Texas, is $189,950 compared to $475,000 in Miami, FL.   Because of an uneven economic recovery, people have to move where the jobs are. And where the jobs are in urban areas such as San Francisco, Miami, and New York.

Gentrification

Gentrification is defined as a process of changing the character of a neighborhood through the influx of more affluent residents and businesses.  An uneven economic recovery pushes more and more urban neighborhoods to be gentrified.  

Gentrification brings artisanal bread, yoga, and juice bars, which increase real estate prices. Little Haiti, Overtown, and Wynwood, once considered low-income neighborhoods, are now hipster neighborhoods with art galleries and wholefoods.

Availability

There is a severe shortage of housing inventory; developers are not building as many starter homes as needed.  They prefer building luxury homes because they make more money off them.

Student and other Debts

The Average American has roughly $38,000 in student loan debt. When factoring credit cards, auto loans, and personal debts, the typical middle-class American is already highly leveraged way before they think about buying a home.  A high debt-to-income ratio is one of the main reasons many mortgage applications get denied.

Zoning Laws

Upper-middle-class Americans have been using zoning laws effectively to prevent developers from building low-income and starter homes in their suburbia—all in the name of protecting their home values.

 Private Equity Landlords

According to Bloomberg, real estate investment trusts, private-equity firms, and hedge funds have spent at least $25 billion purchasing houses since 2012.  They converted the properties into single-family rentals, which exacerbate the availability problem mentioned above.

Local, State, and federal incentives

 Before the housing crisis, local, state, and federal governments used to incentivize the middle class to buy houses. Almost all those incentives went away; they need to come back with better oversight.

The housing challenges facing middle-class Americans are real.  Something has to be done before it becomes a full-blown crisis.

BACK TO TOP
Continue Reading
1 Comment

1 Comment

  1. Pingback: Buying a Home without a Realtor FMC American Middle Class

Leave Comment

Advertisement
American Middle Class / Sep 26, 2022

How Do You Build Wealth: Invest in Real Estate

The estimated reading time for this post is 436 seconds How Do You Build Wealth: ...

American Middle Class / Sep 14, 2022

What Does the Hot Inflation Report Mean for the Housing Market

The estimated reading time for this post is 100 seconds The benchmark 30-year fixed mortgage...

American Middle Class / Sep 11, 2022

How Do You Build Wealth: Invest in Financial Assets

The estimated reading time for this post is 350 seconds How Do You Build Wealth: ...