Financial Hardship Sweeps Across America
According to the latest data two thirds of middle class Americans are grappling with financial hardship.
What does it mean for homeowners and real estate investors?
The Middle Class Is Gone
The past several years of monetary policy and economic trends appear to have been successful in finally wiping out America’s middle class.
Data from the National True Cost of Living Coalition shows 65% of Americans earning 200% over the official national poverty line, about $62k a year, say they are struggling financially.
They report that they are now living paycheck to paycheck, with around half stating that they don't even have $500 in savings left.
Of course, inflation plays a major role in this, with living costs up by 21% to over 38% in many categories.
At the same time, there has been increasing regulatory and taxation pressure squeezing homeowners into folding.
Now places like California are setting up free super markets and free alcohol outlets to further supplement consumers who can’t survive on food stamps alone. To the tune of millions of dollars to be paid by taxpayers.
What Are The Outcomes?
Although the latest bank data shows that residential foreclosures have stayed moderate so far, all other categories of debt appear to have fallen in performance for the past two years. Including credit cards, auto loans, business loans, and commercial mortgages.
Financial hardships make it hard for lenders to collect on debts. It can also cause substantial upticks in crime, which also further deteriorate property values in dense urban areas.
So far, house prices have stayed high, like inflation. Yet, it seems like only a matter of time before many more owners are pinched to the point of having to sell in distressed financial positions.
For now that means a sweet spot for real estate wholesalers to buy cheap and sell with great profit margins.
Looking forward there ought to be a big surge in households needing to rent, yet with very weak and damaged credit profiles.
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