December 29, 2015 Comments Off on CRE and the Middle-Class Mess Views: 497 California News, National News

CRE and the Middle-Class Mess

It’s no secret that the housing crisis and recession hit the middle-class particularly hard. More than six years after the recession, the middle class—defined as adults whose annual income ranges from $42,000-$126,000—continues to shrink.

According to the Pew Research Center, the middle class made up 50% of the population in 2015, a decline from 61% in 1971. During the same period, the upper class doubled to 9% of the population, while the lower-income tier increased from 16% to 20% of the population.

From the multifamily perspective, owners of higher-end properties catering to the 9% can raise rents, so developers are producing more luxury apartments. On the other side, the federal and state governments continue subsidizing affordable apartments.

But owners of properties catering to the middle class – primarily Class B and Class C assets – can’t raise rents because of wage stagnation. This is leading to limited construction of product geared toward middle-class renters.

Read More at National Real Estate Investor

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