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The middle class is feeling the crunch of the housing market

Date posted:  6/19/14 11:30:00 AM The middle class is struggling to find affordable homes.

Affordable homes for households falling in the middle class appear to be drying up, according to a recent report from an online real estate site.

Trulia revealed fewer middle-income households are able to afford homes on a nationwide scale, as fewer than six of 10 homes - 59 percent - that are for sale can be attained by the middle class. In October 2013, 62 percent of all homes for sale could be acquired by middle-class families.

Trulia determined affordability levels by figuring whether the total monthly payment of a home was less than 31 percent of the median household income in the metro area. The total monthly payment included the mortgage loan, property taxes and insurance. Trulia came up with an affordability level for each major metro area based on the local median household income.

A key part of the problem is the nation's economy. The Chicago Sun-Times reported the middle class is slowly shrinking because household incomes haven't improved. The median household income in 1989 for an American family would be $51,681 if measured in today's dollars. In 2012, the median household income was just $51,017.

"Almost all of our economic gains have gone to the top one percent," Robert Reich, a former secretary of labor under the Clinton administration, told the Sun-Times. "The middle class is made up of 60 to 70 percent of Americans. The bottom 15 to 20 percent are poor. And all of the top 10 percent may not regard themselves as wealthy, but they are on the other side of the great divide."

The U.S. Department of Commerce said it's become harder to secure middle class status because the cost of housing, education and health care has climbed faster than income.

Best markets for affordability
The most affordable metro area for middle-income households is Dayton, Ohio. There, 85 percent of homes for sale are affordable to the middle class, with the median size coming in at 1,400 square feet.

Rochester, New York; Akron, Ohio; Gary, Indiana; and Toledo, Ohio, all finished in the top five for most affordable metro areas for the middle class. Rochester and Akron both came in with 83 percent of homes affordable for the middle class. Gary and Toledo were at 81 percent.

Gary offered the most space for affordable homes at 1,500 square feet. Dayton and Rochester weren't far behind at 1,400 square feet.


What cities should middle-income families avoid?
Middle-income households looking for homes in California might run into some trouble, as six of the seven least affordable markets are found in the state.

San Francisco was the least affordable with 15 percent of middle-income families being able to attain a median home. Los Angeles was next in line at 22 percent. San Diego (25 percent), Orange County (26 percent), San Jose (30 percent) and Ventura County (33 percent) were the five other metro areas from The Golden State finishing in the bottom 10 for affordability.

Markets to watch
Phoenix continues to be a fascinating housing market to track because of its oscillating housing market. Prices in Phoenix soared before the Great Recession but crashed after the burst of the housing bubble.

Sixty-one percent of Phoenix homes were affordable for the middle class in 2014, according to Trulia. Last year, that figure was 68 percent.

Marcus Fleming, a Redfin real estate agent residing in Phoenix, said buyers just aren't sure what's coming ahead.

"The issue seems to be that a lot of what's on the market is overpriced, and buyers are feeling uncertain about whether it's a good time to buy," Fleming said in a statement.