Are you in the middle class, 2023?

[DCLMP]

inflation definitely plays a part but i think we need to remember that on the one hand there are expenses most people now consider 'basics'/'necessities' that were not necessarily the norm in the average 'middle class' budget 20 years ago-cell phones (only about 50% of the public had them and definitely not all family members extending down to kids, yup it's somewhat of a trade off for loss of landline expense but much more expensive month to month). internet in one's private home was still pretty rare with only about 20% of u.s. homes buying in, and yeah cable was popular but it was still only used by about 60% of the population and more often than not it was the more basic level programming packages vs. what it seems most folks speak to having today.

so on the one hand you've got a budget that likely benefited from some fewer/lower expenses BUT anyone who owned a home 20 years ago and was paying a mortgage on it was likely paying at or (more likely) WELL ABOVE what people are complaining about being horrific interest rates today-the lowest interest rate during the 30 year period leading up to 2003 was IN 2003 during a couple of months when it got down to the high to mid 5's but it was generally higher, peaking at over 14.6% in 1984. starting in 1971 rates were around 7.3% and kept rising up to a peak of 18.3% in 1981 (we were THRILLED in the 90's to get a 'great' interest rate on our first home of over 10% ). homes were less expensive yes but wages were lower as well and those interest rates were a killer.

i guess what i'm trying to say is-there have been financial challenges across the decades and what might appear to have been easier times years ago had their own obstacles.

Like I’ve said many times on this forum the amount of debt back then is not comparable to today. We are in a giant debt bubble. It’s easy to research the debt to gdp ratio over the last few decades.

 

[DCLMP]

I have several real estate friends. This is the trend here. We have a lot of foreign cash buyers (from China) in this area. The main homebuilder in my city literally advertises in China. I really wish this wasn't allowed to happen. I firmly believe that only US Citizens should be able to purchase single family homes.

My in-laws live in a 55 an older community in Irvine and over the last few years the demographic has become mostly Chinese.

 

[DLgal]

My in-laws live in a 55 an older community in Irvine and over the last few years the demographic has become mostly Chinese.

Yup. Its close to 50% at this point city wide. My neighborhood (a newer one) is, by my estimate, closer to 75%.

 

[RamblingMad]

Yup. Its close to 50% at this point city wide. My neighborhood (a newer one) is, by my estimate, closer to 75%.

Interesting. Remember when the Japanese were buying up the west coast in the 80s?

https://www.latimes.com/archives/la-xpm-1992-02-21-mn-2588-story.html

 

[DCLMP]

Yup. Its close to 50% at this point city wide. My neighborhood (a newer one) is, by my estimate, closer to 75%.

There are pockets of this all up and down the pacific coast. Vancouver is another city which is predominately Chinese.

 

[Pea-n-Me]

we were on the top of the world when they dropped below 10% and prices had raised/we had paid just enough to drop p.m.i.-the house was 30 years old when we bought it and with the exception of millions of layers of different wallpaper in the kitchen and some groovy circa '70's wood paneling on a few walls that any upgrades had ever been done (including the appliances =stove/oven).

Sounds like ours. And yes, first interest rate we had was 11.5%, with PMI.

 

[Colleen27]

Real estate values have also trended downward since the highs in early 2022.

That's such a heavily local question, and averages are so skewed by the highest-cost markets that see the biggest swings, that it is hard to generalize. We just finally listed my mother's house after our private buyer fell through. While overall price gains have slowed in our metro, in the specific city and neighborhood where she lives there's absolutely no inventory and the few houses that have hit the market in the last 6 months are selling about 10% over asking and under contract within a week. It seems that right now, in our area at least, rapidly rising rents and an aging population are driving very strong demand for smaller, more affordable starter-home/downsizing properties (ranches under $250K) despite softening in the market for larger and newer homes. And since it has been decades since builders saw starter homes as a good concept for new developments, that is making nice mid-century neighborhoods pretty hot right now.

Only the top 10%? Do you have backup on that? I would think that with the lack of pensions, most people have something in 401ks.

https://www.cnbc.com/2021/10/18/the...-own-a-record-89percent-of-all-us-stocks.html

"The wealthiest 10% of Americans now own 89% of all U.S. stocks held by households, a record high that highlights the stock market’s role in increasing wealth inequality."

Yes, some people in the bottom 90%, particularly those in the upper half of that group, have some stocks. But many employers don't offer 401ks or don't match, so there is little incentive for participation, and for the working class even having a 401k often looks like putting away $1000/year, which doesn't add up to a drop in the bucket compared to overall stock ownership (or the real costs of retirement). The lack of pensions is going to mean many people in the younger generations (Gen X to present) will work until they either die or become too ill to work and patch together a "retirement" out of medicaid, food stamps, and other public benefits.

 

[SirDuff]

Most people aren’t in the market. Only the top 10% has significant equity holdings. For most people their net worth is driven by their real estate.

Only the top 10%? Do you have backup on that? I would think that with the lack of pensions, most people have something in 401ks.

I didn’t say only.

A lot of employers don’t offer 401k. And a lot of employees don’t participate. There is a large percentage of the population living paycheck to paycheck that don’t contribute. You can Google this. This is nothing new.

So, someone else came into your post and added the word only?

 

[DCLMP]

So, someone else came into your post and added the word only?

He said significant equity holdings. Only around 300k have over 1 million in 401k so the 10% sounds about right. About 35% of Americans have 401k's and less than 20% have IRAs

 

[amylevan]

He said significant equity holdings. Only around 300k have over 1 million in 401k so the 10% sounds about right. About 35% of Americans have 401k's and less than 20% have IRAs

I’m not here to argue that Americans don’t save enough.

But only 10% of people have significant amounts in stock? Really? 58% of Americans have some amount of stocks as per this Gallup poll. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.asp
Heck, according to this poll 25% of Americans making less than $40k own stock.

401k balances are a tricky thing because once you leave a job, many roll them over to an IRA or simply leave them and stop contributing. We don’t have 1 million in a single 401k, but we have significant amounts of stock across several accounts and we are NOT in the top 10%.

Yes, Americans are undersaved and overspending. I’m not arguing that. But the conversation started by saying that only 10% had enough savings in stock for the market to have an effect on their savings, and that most net worth is in their real estate. And to that I say that I do not believe it.

 

[Kwami]

I’m not here to argue that Americans don’t save enough.

But only 10% of people have significant amounts in stock? Really? 58% of Americans have some amount of stocks as per this Gallup poll. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.asp
Heck, according to this poll 25% of Americans making less than $40k own stock.

401k balances are a tricky thing because once you leave a job, many roll them over to an IRA or simply leave them and stop contributing. We don’t have 1 million in a single 401k, but we have significant amounts of stock across several accounts and we are NOT in the top 10%.

Yes, Americans are undersaved and overspending. I’m not arguing that. But the conversation started by saying that only 10% had enough savings in stock for the market to have an effect on their savings, and that most net worth is in their real estate. And to that I say that I do not believe it.

There's a pretty big difference between "has stock" and "has significant holdings". Don't be ridiculous.

 

[Kestryl]

We are technically just above middle class.

That said, we have no kids. If we did, it is highly likely one of us would have to quit given the severe lack of childcare in our area. We’d be firmly back in middle class, plus the extra expenses of having a kid. Which yes, is still better than many, but if I hear “no one wants to work” one more time…

 

[DCLMP]

I’m not here to argue that Americans don’t save enough.

But only 10% of people have significant amounts in stock? Really? 58% of Americans have some amount of stocks as per this Gallup poll. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.asp
Heck, according to this poll 25% of Americans making less than $40k own stock.

401k balances are a tricky thing because once you leave a job, many roll them over to an IRA or simply leave them and stop contributing. We don’t have 1 million in a single 401k, but we have significant amounts of stock across several accounts and we are NOT in the top 10%.

Yes, Americans are undersaved and overspending. I’m not arguing that. But the conversation started by saying that only 10% had enough savings in stock for the market to have an effect on their savings, and that most net worth is in their real estate. And to that I say that I do not believe it.

Over 50% of Americans live paycheck to paycheck. I guess it depends on your definition of significant. Your definition is obviously much different than mine.

 

[Colleen27]

I have several real estate friends. This is the trend here. We have a lot of foreign cash buyers (from China) in this area. The main homebuilder in my city literally advertises in China. I really wish this wasn't allowed to happen. I firmly believe that only US Citizens should be able to purchase single family homes.

Yeah, I think the time has come for restrictions on foreign buyers and restrictions on short-term rentals like AirBnB. Both are distorting markets to the point where people who live in a place cannot afford to buy, while people who are looking solely for investments or recreation are buying up considerable chunks of the available real estate.