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The Middle Class
June 4th, 2015 12:52 PM

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According to the National Association of Realtors chief economist, "economic inequality is growing, upward mobility is stalling, and the middle class is shrinking." 

Over the past decade, renter households have grown by 8 million, while homes owned have fallen by 2 million.  As a result, the country's home ownership rate has fallen to a 20-year low.

Lending requirements have swung entirely in the opposite direction of when loose mortgage standards allowed for unsustainable high levels of home ownership.  Also, due to widespread housing shortages, home prices are rising faster than the income of would-be buyers.  So, the rising ranks of renters and the shrinking ranks of home owners are the key indicator of the growing inequality across the country and the shrinking of the middle class.

In order to turn this negative trend around, the banks will need to return to a "happy medium" for lending, reducing some of their strict requirements for buyers, reducing government guarantee fees, and lowering FHA insurance premiums.  Small builders also need less financial regulations from community banks, as they are the biggest producers of single-family homes.  More supply from small builders would relieve inventory shortages and stabilize home price growth. 

These policy changes would give more people a chance to build wealth through home ownership, as well as create more jobs and higher wages. As the 2016 presidential race is just around the corner, we shall see how these economic points come into play!

Posted in:Real Estate
Posted by Allen Doeringer on June 4th, 2015 12:52 PMPost a Comment

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