Wednesday, March 29, 2023

"Middle Class Families Can No Longer Afford Rent As Prices Hit Astronomical Levels"

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"Middle Class Families Can No Longer Afford
 Rent As Prices Hit Astronomical Levels"
By Epic Economist

"A decent, safe, and affordable home is something all Americans need to thrive. For decades, low-income families have struggled to have access to affordable rental homes, but now this is a huge problem for the middle class, too. Millions of middle-income earners can’t afford rent in major U.S. cities due to the steep rise in prices recorded since the pandemic. Without significant pay raises or government assistance, these middle-class households are being shut out from typical middle-class neighborhoods, and this is triggering a chain reaction that leads to systemic poverty and lingering inequality. In other words, housing costs are squeezing the life out of middle-class Americans.

The typical home now costs about $80,000 more than it did just two years ago, and the average rent in the U.S. is over $1,000 more expensive than in 2020. Rents are climbing an average of 3.5% annually, the study found, while middle-class renters’ incomes have declined 9% over the past decade. In most metropolitan areas across the country, the American middle class has been spending far more on housing than they can afford, researchers found. The study highlights that 21.2% of middle-class homeowners and 46.3% of middle-class renters in the United States are either moderately or severely burdened by housing costs — defined as spending more than 30% or more than 50% of their income on housing, respectively.

"Ultimately, we're in a rental affordability crisis," noted Whitney Airgood-Obrycki, a research associate with the Harvard Joint Center for Housing Studies. Believe it or not, 15 years ago, more than two-thirds of people who rented an apartment or a single-family home in the U.S. earned less than $30,000 a year, the study shows.

Every year that passes by, it gets even harder for middle-class renters who cannot qualify for subsidized housing to find affordable apartments on the market. Renters need to earn $21.21 an hour to afford a modest, two-bedroom apartment in the U.S., according to the National Low Income Housing Council, significantly more than the average national hourly wage of $16.38. This is why 51% of renters in the middle class are unable to afford a place to live in most U.S. cities.

The savings that used to be associated with the middle class have dried up in the past few years, as wage growth stagnated. Not only does this make it harder for people to stay in the middle class, but it makes coming up with high sums to rent or buy city apartments impossible. “If there aren’t enough cheaper options, it becomes a chain, with a middle-class person living in an apartment a lower-income person might have occupied, and so on,” Apartment List Senior Research Associate Sydney Bennet said. “If you miss that gap in the middle for housing, it has a chain reaction.”

And the aftermath of that is systemic poverty and an increasingly unequal America, where only those at the very top of the economic chain can own their homes and build equity through properties while the middle class is hollowed out. This isn’t only a housing and rental crisis, this is the reflection of the crumbling foundations of a broken society. And nothing that our leaders are doing is making things any better. The financial meltdown that we’re witnessing today is a reminder that more distress is coming for everyday Americans. And sadly, it looks like real estate will be the next domino to fall."
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