The Middle Class is still being left out of the "Recovery" of our economy. Not only are the prices, which are not increasing in some areas, but the interest rates are going up, except for the Jumbo Loan (those loans for over $400,000 varying area to area). Those bidding on homes in the affordable ranges (under $200,000) are being out-bid by investors and cash buyers often buying houses at a price that generates cash flow for them. For example: A buyer paying $150,000 for a home putting 3.5% down ($5,250), and having a payment of $860 per month = $103,200 over 10 years, value of property at the end of 10 yrs appreciating at 3% per year = $201,587 an increase in personal wealth of $51,587. (After sale= $51,587-$5,250 dwn-$20,159 cost of sale = $26,178 profit of 498% on the initial investment of $5,250) Not bad
Rent for the same property would be approximately $1200 per month = $144,000 with no rent increases - with increases of 5% over 10 years = $151,200 - $48,000 more than owning and $151,000 out of pocket - no increase in personal wealth. We need to lobby Congress via letters, facebook, and twitter to keep the rates down to help level the playing field. Homes are still out of reach of most of the middle class. At $10-$20 per hour, homeownership will remain just a dream and not a reality. Below is the information on houseing from Zillow.