The Collapse of the Housing Market
The Future of the Middle Class
When the housing crisis began, home prices became stagnant. Adjustable rate mortgages increased and many could no longer afford to pay. Some walked away from their homes, and some stopped paying altogether. Banks stopped lending and the middle class, who would normally qualify for a loan, could not get a loan. Small business owners, primarily middle class, could no longer receive financing and banks stopped lending to one another. Without a flow of funds, that signaled weakness to the economy.
Today’s middle class is dwindling and so many of them are living paycheck to paycheck. TAP spoke to fifty middle class professionals, several of them entrepreneurs. 100% of them are college educated with a bachelor’s degree or higher, 9 work or have worked in finance, 10 are entrepreneurs, and 15 work in healthcare. Of the 9 who worked in finance, 1 was retired and 2 were laid off. The 15 healthcare workers did not seem to be affected; 3 of them had purchased homes within the past two years. All, but one, of the entrepreneurs said they were affected by the crisis, they noticed contracts stop coming, most are not able to pay their quarterly taxes, and most have scaled back on miscellaneous spending.
TAP asked: How would you define the middle class?
“The middle class was always the ‘spread in the sandwich,’ we are always affected by volatility and shifts in the economy. We are the ones who do not qualify for government help, but get hit with the bills that can be detrimental to us. We are the ones who fall apart when we lose jobs and work, while the top dogs still get their fat bonuses, and use our tax dollars,” said Shir Konas, owner of her own graphic design studio and certified fitness instructor.
Darlene Aiken, an author and owner of Inner Beauty Solutions, defined the middle class as, “those who pay for the wealthy and poorer classes.”
Dr. Vernon Murray, a professor of marketing at Marist College , defined the middle class as, “people who work hard and who still haven’t figured out that car notes and mortgages are not something to celebrate, but rather to avoid.” He believes that most middle class Americans still have no concept of alternative housing construction and used cars, to keep their debt down.
TAP also asked if the government is doing enough to help the middle class.
25% said no, while others believe that the government was not designed to undertake such a task. Others, about 80%, believe that this crisis was years in the making and will take years to get better.
Dr. Murray said the future of America will belong to people who will learn to live simplyand off the grid. They will not be the stereotypical rural impoverished. Rather, they will be white collar professionals who can work by computer/internet in self-built alternative homes, with organic gardens and fruit trees and who, if they lose their jobs, will not worry much, because their debt levels will be very low.
Today, the current administration is trying to add liquidity to the market by continuing to spend billions of dollars in the financial sector. However, unemployment has reached a level that many have not seen before, qualified people are not receiving loans, many credit card companies are lowering credit limits on accounts that would otherwise have probably received an increase and many are playing the wait-and-see game. Those who are homeowners are hoping that their home prices will rebound and those who wish to purchase, want to see banks lend again.
