What Discourages Middle-Class Homebuyers?
Power Real Estate Marketing
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Jenny Niklaus, CEO of homeless advocacy group HomeFirst, was quoted by CBS San Francisco as saying that there is a stunning gap between what people can afford and the actual affordability scenario. A person has to earn more than S30 per hour to afford an apartment in San Jose.
A $30 per hour salary is equivalent to $62,400 yearly salary. With such an amount, only an apartment will fit into your budget. Listed among the most expensive housing markets in America, San Jose has a median home sales price of $628,000, as noted by Trulia. This indicates a serious issue of unaffordable rental rates which the housing industry needs to address. Nowadays, people are spending their earnings more for paying rent than saving it to buy a house. Apartment prices are presently above pre-financial crisis levels at 6.45 percent.
The American middle class has since been linked with dreams of homeownership. However, in a study by PEW Research Center, the middle class sector in America has drastically declined over the years with only 44 percent left in 2014 from 53 percent in 2008. This is almost in the same percentage as 40 percent of individuals who consider themselves as lower to lower-middle class.
This has a significant implication for the housing economy that has always been surrounded and propelled by middle class homebuying sentiments.
53.2 percent of Americans had an annual income of less than $30,000 in 2012, according to the Social Security Administration's report on wage statistics. Utilizing 28 percent of earnings, this amount of annual salary can only allot, before taxes, $700 for housing on a monthly basis.
The median household can afford to spend $1,190 a month on housing using 28 percent of income before taxes. Depending on where you are situated, this may or may not be enough to cover your rent. A single bedroom in Atlanta may cost an average rent of $966 while a three bedroom in Cincinnati has an average rent of $938. Apartments.com compiled data on the 100 most-searched rental markets in the last quarter of last year. Popular locations including Los Angeles, New York, Chicage, San Francisco, Philadelphia, Washington, D.C. and Boston have a higher average rent of $1,000 or more every month.
Paying for your rent is just the beginning. There should be more than enough to save a portion of your income for downpayment or pay for debts and qualify for mortgage.
As rents continue to rise, more and more people will not be able to buy home
Sara Goldman is the director of content and creative writing for http://powerrealestatemarketing.com. Power Real Estate Marketing is based in San Diego and committed to offering Realtors and Mortgage Brokers marketing solutions that help build their businesses and simplify their lives. Power Real Estate Marketing offerings include: marketing real estate, real estate postcards, door hangers, notepads, and magnets to name a few.
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