For a truly happy 4th of July? We need a stronger middle class

4th of julyby Dan Rafter

The national economy is still in recovery mode. Developers are planning more apartment buildings. Grocery-anchored retail centers are popping up everywhere from Columbus to Omaha. There’s even been a return to spec industrial building, with new industrial centers fueling the economies of Indianapolis and Louisville.

Why, then, don’t the national economy and the commercial real estate market feel stronger? Both have been in recovery mode for years now. Yet even as commercial deal activity rises and unemployment numbers slowly but fairly steadily dip, the economy and the real estate markets still feel unsteady.

Maybe it’s because the middle class continues to struggle.

A report earlier this summer from online listing service Trulia provides a good example of the continuing struggles of the middle class. According to the report, homes in markets across the country have become less affordable for middle-class residents.

In San Francisco, traditionally one of the most expensive housing markets in the country, the median household earns $84,129. Only 14 percent of the homes for sale in this market are affordable to people earning this median income. In Orange County, Calif., only 24 percent of the homes for sale are within financial reach of residents earning the median income, while in New York, only 25 percent of homes are affordable to middle-class residents.

Things are better in the Midwest, of course. Trulia ranks Akron, Ohio, as the most affordable housing market in the country, with 86 percent of the homes for sale affordable to those earning the area’s median income. In Toledo, 84 percent of the homes for sale are affordable to those earning the median income.

There’s even a study out now from Offers.com showing that middle-class residents can’t afford to spend as much on their 4th of July celebrations this year.

According to this survey, U.S. consumers making more than $150,000 a year will be spending the most this Fourth of July. Those earning $50,000 to $74,999, though, will be spending the least. Those making under $25,000 a year say they will be spending less than this group.

So, what do the commercial real estate markets and national economy need for an even bigger boost? A middle class that felt confident in the economy — and, of course, made more money each year — would be key.

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This entry was posted in industrial real estate, multi-family, national commercial real estate, residential real estate, retail and tagged , , , , , , , . Bookmark the permalink.

2 Responses to For a truly happy 4th of July? We need a stronger middle class

  1. Dan,

    You ask the question – “why don’t the national economy and commercial real estate feet stronger?” I don’t know where you get your information but the stock market continues to break records, corporate profits are at all time highs and speculative construction is being demonstrated in most markets – this seems like a strong recovery. This said if your argument is about income inequality – I agree. Ultimately wage earners and middle-class have to earn enough money to be able to buy those very products they are in fact producing or capitalism cannot continue in a productive way.

    • rejblog says:

      Hi, Phil: Thanks for your reply. I wrote this post right before the new unemployment numbers came out, and again unemployment dropped. I guess income inequality, though, is at the heart of the matter. It seems that there are still far too many people who work long hours — maybe holding two or more jobs — who still can barely afford life’s basics. Let’s hope that changes.

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