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Fewer Than Ever Can Afford to Buy a Home As America’s “Thriving Middle Class” Is Dead

Michael Snyder
July 29th, 2016
Economic Collapse Blog
Comments (43)

homesalesplunge

This article was written by Michael Snyder and originally published at his Economic Collapse blog.

Editor’s Comment: The cost of living is rising daily, while wages are stagnant. As SHTF has covered before, the problems are compounding. Wall Street and corporate interests have bought up the market with their cheap QE3 money, and many have bought up single family homes, raising prices against ordinary people who must now face exorbitantly high costs in order to buy a home (by which everyone really means take out a lifelong loan against the bank), making more than ever inclined, or forced, just to rent and get by without gaining assets or achieving the American Dream… few find it possible to even gain relative financial security.

As Michael Snyder notes, instead of people becoming well adjusted in something that resembles normal life and comfortable Middle Class status, more and more are facing the desperation of a lack of good jobs, less and less income, steadily mounting taxes and property values and difficulty in making ends meet across the board. The temptation has never been greater for struggling families to join the dole, and make the larger collective government one family closer to complete. The pressure to take food stamps, welfare and benefits is understandable for those facing poverty, but the larger picture is caving in all around us. The America many of us grew up in is dying, dead and gone. Fleeting at best. Hold on as best you can, things are likely to become difficult.

Bye Bye Middle Class: The Rate Of Homeownership In The United States Has Hit The Lowest Level Ever

by Michael Snyder

The percentage of Americans that own a home has fallen to the lowest level ever recorded.  During the second quarter of 2016, the non-seasonally adjusted homeownership rate fell to just 62.9 percent, which was exactly where it was at when the U.S. Census began publishing this measurement back in 1965.  This is not what a “recovery” looks like.  All throughout the Obama years, the percentage of Americans that own a home has gotten smaller and smaller and smaller.  The reason for this, of course, is that the middle class in America is dying.  Last year, we learned that middle class Americans now make up a minority of the population for the first time ever.  In order to have a high rate of homeownership, you need a thriving middle class, and you can’t have a thriving middle class without good paying middle class jobs.  This is why I write about the evisceration of the middle class so extensively, because the U.S. economy is systematically being hollowed out and most Americans don’t understand what is happening.

Traditionally, owning a home has been a sign that you have arrived as a member of the middle class, but under Barack Obama the percentage of Americans that own a home has fallen every single year.  In the past, we have talked about how it had fallen to the lowest level in decades, but now it has officially fallen to the lowest level ever.  The following comes from CNBC

After rising just over a decade ago to its highest level ever, the nation’s homeownership rate fell to match its all-time low and could drop even further in the months to come.

In the second quarter of this year, the rate fell to 62.9 percent, not seasonally adjusted, which is the same as it was in 1965, when the U.S. Census started tracking the metric. During the epic housing boom in the mid-2000s, the rate soared as high as 69.2 percent. That was when politicians touted the so-called “ownership society.”

So why is this happening?

Well, according to Wolf Richter analysts are blaming many factors…

  • Rising home prices in an economy of stagnant wages (for the lower 80%) have pushed entry-level homes out of reach for many people.
  • Lower priced homes in many urban areas entail a huge and costly ($ and time) commute every day. And even then, these homes may be too much of stretch for big parts of the population in expensive urban areas.
  • First time buyers are having trouble saving for a down payment since they spend their last available dime to meet soaring rents.
  • Millennials have been blamed. They always get blamed for everything. They saw their parents deal with the American Dream as it turned into the American Nightmare, and they learned their lesson early in life.
  • The super-low interest rate environment hasn’t made homes more affordable because home prices, in response to super-low interest rates, have soared, and in the end, mortgage payments are higher than they were before.
  • Higher home prices entail other costs that are higher, including taxes, brokerage fees, and insurance.

Certainly all of those points are legitimate, but the truth is that what we are facing is much broader than all of that.  The middle class in the United States has been dying for decades, and in recent years the long-term trends that have been slowly eating away at the middle class like cancer have accelerated significantly.  Just consider these numbers…

-In America today, nobody has a job in one out of every five families.

-At this moment, 102 million working age Americans do not have a job.

-According to the Social Security Administration, 51 percent of American workers currently make less than $30,000 a year.

-In 1970, the middle class brought home approximately 62 percent of all income. Today, that number has plunged to just 43 percent.

-The Federal Reserve says that 47 percent of Americans could not pay an unexpected $400 emergency room bill without borrowing the money from somewhere or selling something.

-One recent survey discovered that 62 percent of all Americans have less than $1,000 in savings.

-If you currently have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.

-According to Kathryn J. Edin and H. Luke Shaefer, the authors of a book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day.  If you can believe it, that number has doubled since 1996.

-Back in 2007, approximately one out of every eight children in America was on food stamps. Today, that number is one out of every five.

-Things continue to get worse for the middle class as we head into the second half of 2016.  Gallup’s U.S. economic confidence index just hit the lowest level so far this year.

I could keep quoting numbers at you all day, but hopefully you are getting the picture.

The middle class in America just keeps getting smaller and smaller and smaller, and our politicians just keep on conducting business as usual.  They don’t seem to care that they are strangling the life out of what was once the largest and most thriving middle class in the history of the planet.

And things could soon get much worse for the middle class as this new global economic crisis accelerates.  In fact, highly respected economist Peter Schiff believes that a major downturn in the U.S. is imminent

HERE IS THE REALITY: The world has caught on, and the gig is up. Under Obama’s stewardship, the U.S. national debt has gone from $10 Trillion, to what will be $20 Trillion by the time he leaves office, with nothing more than 100 MILLION Americans out of work, and 50 MILLION in poverty and on food stamps. That’s what cheap money bought for us. It was all “borrowed” cheap money too, making it infinitely worse, and the world is tired of lending.

There are so many families out there that are really struggling right now, and more than two-thirds of all Americans believe that the country is on the wrong track.

I would like to tell you that happy days are here again and that the best times for America are just around the corner, but unlike the politicians at the Republican and Democratic national conventions, I am not going to lie to you.

Very rough times are coming, and things are going to get much harder for the middle class.

Plan accordingly, and get prepared while you still can.


GetPreparedNow-MichaelSnyderBarbaraFixMichael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.

Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream

If you want to know what is coming and what you can do to prepare, read his latest book Get Prepared Now!: Why A Great Crisis Is Coming.

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Author: Michael Snyder
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Date: July 29th, 2016
Website: http://theeconomiccollapseblog.com/archives/bye-bye-middle-class-the-rate-of-homeownership-in-the-united-states-has-hit-the-lowest-level-ever

Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information.

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43 Comments...

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  1. I know many people losing their homes and guess what , USA won’t bail them out and they more you work, the more taxes they take.. But Muslims can buy homes easier than Americans

    • Nobama says:

      And stupid people still want to elect Shillery. Stupid people never learn.

      • WhoWTFKnows... says:

        Is this more fear porn by Snyder, which does not compute with my area in FL. My appraiser buddy said this is the busiest he has ever been. And he’s appraised for decades including throughout last housing Bubble.. He also just increased his appraising rates and is getting it. House prices keep climbing, and why? Demand. So it sounds like the dopes at the bottom of the food chain will never be able to afford to buy a house anyway, and when interest rates are as low as they have ever been, like 3% people refi for the cheaper rates. Which could be part of why my buddy is really busy.

        Sounds like another Snyder poor me story. I paid cash for my BOL property. No Mortgage period. Every thing here is entirely paid for.. I practically live here for free. My cost to live here is about .88 cents per day… And that includes annual property taxes and Solar for electric which is all paid for. I can add about another $2 per day if I include Internet.. Which is really just a luxury. Now if I could just get rid of the Federal Income Taxes, which is my Biggest expense, I would be a truly Free Man.

        ~WWTI…

        • Nargonstalator says:

          Anecdotal bud. Nationwide the #s ain’t so good. Most areas of the U.S. are at best flat. Some areas bordering on zero. Wanna buy some realestate in Michigan. Nobody else does either.

        • Barracuda says:

          I AGREE, all the GOOD UPSCALE areas are selling like HOT CAKES, a seller lists their nice home and within days (or HOURS) the property is in PENDING status. Maybe the shitty areas aren’t selling because they never really did sell easy because people with money won’t buy there and people without money cannot afford to!

      • WhoWTFKnows... says:

        I have come to realize, Most of the American people have a really Low Pain Threshold. They would rather be lied to and be told everything is great, and they need to try harder, than a Truthful Guy Like Trump who just comes out and says Unemployment is at like 22%, not the phony number of 5%. My gosh he is just too gloom and doom. Even Mooshell Obama says America is the Greatest Country on the earth. But she also fails to acknowledge her husband doubled the National Debt in the 8 years, which will be passed on to Tax payers.

        Another friend of mine for some reason, is a Hillary Supporter. He says, “So what has Donald Trump ever done for you?” This is BS comment that the Low info crowd says, because they have no facts or gather any real intel. And actually refuse to even read info or watch videos about crooked Hillary. Refusal to watch everything to make an informed opinion, but instead resorts to MSM for their daily Propaganda feel good BS info.

        These are the Stoopid Sheep that will be slaughtered first in a collapse, because they failed to prep, little food, no guns, love cash, and think everything is still A-OK. You know, “How can the Titanic be sinking??… because the Band is still playing.. That kind of Low info crowd.

        ~WWTI…

  2. buttcrackofdoom says:

    since year 2000 we make LESS(thanks to inflation, and the FED), yet we are paying DOUBLE for our houses than we did in 2000….how is THAT sustainable?…..a MASSIVE decrease in home values is COMING to america…..half-price….THAT’S where homes are going, and SOON……bank on it!

  3. anon says:

    Tough shit? Chew harder.

    No more sympathy.

  4. Enemy of the State says:

    In my tiny lil TWP tons of homes up for sale .. some obvious foreclosures ,, one I saw went up for auction so I went to see how that process goes out of curiosity
    it sold for at least 10K below what it should have , and I’m sure it would have been sold for less but two idiots got into a bidding war over it , so my gut feeling would be that it would have went for 30K below what it should have

  5. nubria 123 says:

    Its not going to get better.

  6. anon says:

    Some people should live in the woods. They don’t deserve a house to live in.

    Take it from me. Over the years I have seen what people do to homes.

    They DESTROY them! I have seen it over and over where a small family moves in a nice home and you hope. Man, I hope they take care of the property. Takes about three months till you know for sure. They forget about mowing the yard. Then they bring in a couple of Pit bulls for image, to destroy the calm of the neighborhood. Hell they can’t figure out what day to put out what trash but can text like a superhero. The have more tattoos and metal body piercings than a circus freak and walk around wearing their pants like they have a lump of shit in them. After about a year they move out. Leaving the land lord to refurbish yet again the inside of the structure. You would not believe how much trash they leave behind. How about a hoarder living next to you or a animal lover that had, NO LIE!, 123 cats and 10 dogs , some free and some caged in the home. When she died it took the ASPCA three days wearing hazmat suits to get the animals out. Damn nightmare.
    So the way the economy is going you will see more and more of this happening.

    • grandee says:

      This very thing has happened three times in the last year in our neighborhood.

      One right across the street! Kitchen floor had a huge hole in it and the people just swept their trash into the hole. Their toilet fell through in the bathroom and leaked, ruining the floors. It has since been flipped and a really nice, clean fam is living there now. Thank goodness.

      Three doors down a family of serious misfits lived in utter filth you could smell from the street. Human feces smeared on the walls. Carpets ruined by dogs. It also has been flipped and a nice clean fam with a little welding business in shed is there now.

      But the family that trashed that place moved to a home they inherited and now have 15 dogs living in the house with them. The floors have rotted through as well as the bathroom. These folks panhandle at the grocery store on Friday nights for food and have come to my door asking. My hubby keeps saying “don’t feed the bears”. The neighbors have gone to texting ‘bear alert’ when ever they see them coming this way, so as not to answer the door.

      These are the people that will go first when TEOTWAWKI comes.

      I have tried to minister to them in the name of Christ and at times it almost seems like I get through… and then, they are back to panhandling. Serious mental issues are really the cause. And they are all on .gov assistance.

      • Braveheart1776 says:

        Grandee. it’s the same way in my area. Right across the street from my home there is a 2-story house converted into 4 apartments which has been for sale for the last 3 years. Some remodeling was done by the previous owner but only enough to meet the local building code. The upper floor inside the house in sagging in certain places and it supposedly needs rewiring and has some leaks in the gas line. The local utility company won’t provide service to it until those issues have been resolved. There used to be some undesirables in that place under the previous owner but they all left. Good riddance. It wouldn’t bother me for that house to stay empty. The neighborhood has been better off ever since. If the ones you mentioned are on the public dole then they’re already a lost cause. Nothing can be done for freeloaders.

    • Braveheart1776 says:

      Anon, there’s too many people like that in my area. It’s a shame I have to back there tomorrow. Been a fun 2 weeks at the BOL.

      • anon says:

        Braveheart1776 and Grandee.

        I hate being an asshole at times. I try to be very considerate of my neighbors but some do not reciprocate.
        I have had homes nearby that had rock bands playing screech music and the amount of boom box cars riding around the area is unreal. Loud pipes on motorcycles and crotch rockets you can hear for miles down the road a 5 am in the morning. Some animals bark all day and these people either can’t hear them or think it is so cute. Not much you can do, even with noise restrictions and laws. I understand why neighbors kill neighbors.

  7. Trump Speech – They took our jobs!!! South Park

    Duration – 0:54

    https://youtu.be/FHNk0-7hW3U

  8. Houston/Cypress/Katy/Shtf says:

    Buttcrackordoom. Your right on the money. I work in the Real Estate Industry, I wont disclose what I do, but I can tell you this much. The Investors that I work with have already told me that they will NOT BE PURCHASING ANY MORE PROPERTIES until they know for certain, what will go down between now and 02/17. I am already feeling the heat of low income. I told my fiancée that when October 2016 comes around, that we will see a slow down. Now she is taking me very serious and is hearing the same crap being discussed among co workers, and she believes me now, supports prepping. I have a real plan B in place to ride out this catastrophe. Now that the Russians bombed the air base in Syria, this is telling me that Russians are in the US, and that war is about to start any day now. I will literally have to see if Trump gets into the white house to be convinced. My gut tells me that some type of event will commense, cancelling the elections, martial law declared, etc. Now telling what they have planned. It makes my stomock sick just thinking about it.

    HCKS.

    • PO'd Patriot says:

      Hcks, relax there isn’t a thing we can fix yet”….I keep going over things in my mind that need tweeking and attending to. Picked up some more antibiotics and additional clothing. Acquired some sustainment pouches to attach to the side of my main pack. Purchased an additional “billy can” for cooking over fire. Got to finish up sanding and applying some coats of boiled linseed oil on the walking sticks. Still stocking the pantry with all I can get my hands on. Whether my family stays in place or di-di’s, will depend on the situation.

    • Braveheart1776 says:

      HCKS, I had a cousin in real estate who got out in 2008 BEFORE the financial crisis. She knew ahead of time what was coming.

      • smokey says:

        Looks like it’s happening all over again. Last month in Seattle, home prices rose over 10%. You could have bought a house last year, brought in a sleeping bag and spent the year trimming it all up and painting in and out, then sold it for a $150,000 profit.

        If you don’t have $750,000 minimum, to buy with, you’re driving three hours a day to your affordable place out of town, and still spending $400,000 on that.

    • buttcrackofdoom says:

      yes, an IDIOT….or MAYYYbe even a congressman could see what’s about to happen….if houses go back to “normal” prices, i will buy in once again…the day i sold my home in 2006 was the happiest day of my LIFE….google patrick dot net housing crash page to get a PHD in homes.

    • Copper says:

      HCKS. You already told us that you work as a contractor and remodel houses. Maybe not the same words but you did say you did the work. Regardless, you have seen the game if you have been a laborer or contractor. Builders make money by not paying the bills until they have to. They often make money by pretending the work is sub par and not pay at all. Developers/ buliders get away with it for two reasons. Contractors want future work and often don’t lien the job. They also work without permits/licenses. You know or have seen the game. Trump certainly knows the game. He plays it all the time.

  9. anon says:

    HCKS

    It’s a coming, whatever it is and it is not good.

    Prep for war.

  10. Old Guy says:

    Why does anyone think they even need a home like the one pictured? We saved 10% and paid cash for land and three homes. The one we live in cost 430,00 its 1600 sq ft on two acres. The fact is when you buy on credit it isn’t yours. Until you make that very last payment you are nothing more than a glorified renter. On a positive note I just went and dressed out a few fryer rabbits. My wife has one cooking at this very moment. Im fixing to dig a few potatoes. pick a couple of roasting ears.

    • bb in GA says:

      And, of course, eternal EVIL property taxes. You never really own it. You cannot be cash poor and own lands and houses. Eventually the property tax will force you out by distress sale or FiFe foreclosure. <bb

      • Old Guy says:

        That’s why you always buy property that is capable of producing something. Ive always got something growing when Im sleeping. Ive sold timber and firewood. livestock and hay. Ive sold hunting leases. Taxes are low here and we get a homestead tax exemption on our residence. If you grow a garden the savings on groceries will pay the property taxes. Every thing is a trade off. There aint any such thing as a Win Win situation.

    • Old Guy says:

      Correction $30,000 not four hundred and thirty thousand.

      • bb in GA says:

        Amen. I have followed your advice for years. But there should at least be an exemption from property taxes after you have lived on a specific parcel for X years until the next time the property changes hands. That way, if necessary and you are able, you can live out most of your days on your OWN land. <bb

  11. Jim in Va. says:

    When demand goes down the prices go down. Banks will not hold on to them for long,they’ll sell for what they can get. Then the rents go up. You get screwed either way.

  12. TEST says:

    Got gold? (or silver or platinum)

  13. 30 year sentence to the banks for a lot of things you never use because you are indebted to the man. One more piece of the consumer/debt culture transferring all wealth to the banksters.

    My parents bought a piece of land and built a house pay as you go. My dad builtIit and we were his helpers. As the small one I was step n fetchit.

    He built a country kitchen and we lived there. He added a living room. Then a bedroom. A bathroom and utility room. Pow… second story and 3 bedrooms and a bathroom. The first bedroom becam a formal dining room.

    My parents owned a house.

  14. Hoosierally says:

    Fail to pay property taxes and see who it really belongs to

  15. aljamo says:

    Last year I collected the free item coupons from Harbour Freight out of the community dumpster, no purchase required. I had about 250 of them for various items, small tarps, tape measures, set of screwdrivers, flashlights and headlamp styles, ropes, and on and on. I redeemed them all as the store was a few blocks away. I sold most of them at the flea market for a nice bonus. Now they have a free item with any purchase coupons, starting to pile up and I’m back at it again. The cheapest item to purchase I’ve found is a small plastic razor pen type knife for 50 cents. Still a good deal to get the free item. Dumpster not diver but long armed reacher.

  16. Young people should remain with parents. Work after school mowing lawns, cleaning and cooking for neighbors until they are old enough to get an official job, sixteen years old. Save your money for college. Work your way through college. Live with parents until you’ve saved for a modest home of your own. No debt. You can do it. Help your parents with chores so that your presence is welcomed not resented. Respect goes a long way. Keep your eye on the prize. Know your goals. Accomplish your goals. Trade school and apprenticeship is excellent, also.
    ______

  17. Grampa says:

    To see the impact look at your local foreclosures. that will tell you the real story. they have mostly the high end homes plenty of small ones but the high end are growing quickly.
    Grampa

  18. Mr Smith says:

    The same is true in the UK too so sign up to become a debt slave for 30 years and eat beans on toast because restrictive planning corruption is being used to push building land costs sky high or take a week out and do some burning and looting of the elite and then ask them what price is the land going to cost that we own in the first place.

  19. Mike T. says:

    Why would I spend over $300k-$500k fora house worth less than $100K?

    Economics 101. Idiots, let the game end and the economy will heal.