This is a very good topic, and i believe that the plight of the middle class to be the “white hot center” for productive discussion surrounding the current economic mess.
My wife and I are a young couple making in and around 100k. We are finding it nearly impossible to buy our first home in san diego.
Yes, people in this income bracket are and have been buying 600k homes for the last 5 years, but this is precisely why we are in the mess we now find ourselves in as a nation.
the math is simple, a 600k mortgage, with little to nothing down (lets face it, how many in the middle class have more than 10 percent down), leave you with a 4000/mth mortgage bill. after taxes, a couple making 100k will only take home roughly $5700. this leaves only 1700k for car, savings, childcare, bills, insurance, and any other outstanding loans. I dont have to go any further to show that this is not sustainable, and hence we have a massive resetting of the allocation of wealth in this country in respect to housing.
Im not saying everyone is struggling in the middle class, but the under 40 crowd has to be feeling like they missed the boat.
And this is why i believe the discussion of middle class financial balance is central to the housing crisis. When the average middle class family can afford a home semi-comfortably, we will then see the bottoming of the market. By my numbers above, this means that until the average sale price for a single family detached home falls to roughly 350-450k, the market will once again flatten out.
