Middle-class meltdown
By Drew Johnson on Monday, October 15th, 2007 :: 1:35 pmCategory: Drew's Corner, Financial News
In his article on msnbc.com, Mike Stuckey describes an average family stuck in the throes of the middle class squeeze. The Brennans, whose combined income of $70,000 is above the national average, are unable to purchase a home in the Seattle suburbs they would like to live.
The reason for this? The middle-class squeeze. Though incomes are on the rise for most middle-class workers, expenses have also increased to negate the benefit. This situation is compounded by the overall trend in mortgage lending to a more restricted system, where even qualified buyers find it difficult to obtain a loan.
As Stuckey points out, “Housing affordability data, which links median home prices to median incomes, indicate they (the middle class) could become the first generation of the middle class to experience a serious decline in the rate of home ownership.”
This means that the Brennans, like many of their middle-class contemporaries, who have done everything right financially, can’t get a home in the expensive area they would like to live. This is bad for the Brennans, who need to own a home to build wealth and progress financially, but it is also bad for the country overall, as middle-class spending is a huge economic driver.
This trend is indicative of an overall financial struggle affecting the entire country. Reckless lending by major mortgage companies has resulted in staggering foreclosure and default rates. Reckless lending by major credit card companies has led to an increase in bankruptcies according to the American Bankruptcy Institute.
Debt settlements, debt consolidation programs, and credit counseling services have also seen an increase in business.
Author Bio: Drew Johnson is an expert in the various methods of debt reduction and has successfully reduced his own debt. Read additional articles by Drew on Debt Management, Credit Management and more.
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