It’s so un-American, but unfortunately true: Our middle class, the longtime, oft-cited, official backbone of our country, is disappearing, an ongoing casualty of the big recession and its sidekick, the housing meltdown.
Sadly, the current “economic recovery” is a boon to only a select few, the fabulously wealthy. The average wealth for households with a net worth of $500,000 or more jumped 21 percent from 2009 to 2011. It declined 5 percent for everybody else, according to Richard Fry, senior economist at the Pew Research Center in Washington, Bloomberg News reported. Million-dollar homes are selling at double their historical average while middle-class property demand stumbles, Bloomberg reported.
While house prices have gone up, wages rose only for the top U.S. earners, and fell for the bottom 90 percent, according to an analysis of Bureau of Labor Statistics data by the Economic Policy Institute, a Washington-based think tank.
Since 2008, rich national and international investors have spent more than $20 billion to buy up more than 200,000 homes that they rented or resold (flipped) as the housing market climbed, Bill Schmick reports on iBerkshires.com And all-cash sales have become so prevalent that in the first quarter of 2014 almost 43 percent of all residential property sales were transacted in this way, he reports.
Homes costing $1 million or more rose 7.8 percent in March from a year earlier, according to data from the National Association of Realtors. Transactions for $250,000 or less, which represent almost two-thirds of the market, plunged 12 percent in the period as house hunters found few available homes in that price range, Bloomberg reported.
The problem is exacerbated by the fact that while national and international investors scoop up lower-end properties, builders are concentrating on constructing more expensive houses that generate bigger profits. The luxury home sales include vacation homes, which made up 13 percent of transactions in 2013, the largest share in seven years, according to the National Association of Realtors.
“The American Dream is dead for everybody but the happy few who have enjoyed the tailwinds of the appreciating stock market,” said Robbert van Batenburg, director of market strategy at New York-based Newedge, a multi-asset broker-dealer, Bloomberg reported.
The banks involved in the housing crisis, as we all recall, were bailed out by taxpayers. It’s time for the banks, in turn, to help the disappearing middle class by investing in them. Perhaps some mortgage programs that actually help American citizens keep their homes and/or get them out from underwater. Earlier programs were too complicated or restrictive and didn’t help enough people. Or have we already given up on the American middle class?