The national economy is still in recovery mode. Developers are planning more apartment buildings. Grocery-anchored retail centers are popping up everywhere from Columbus to Omaha. There’s even been a return to spec industrial building, with new industrial centers fueling the economies of Indianapolis and Louisville.
Why, then, don’t the national economy and the commercial real estate market feel stronger? Both have been in recovery mode for years now. Yet even as commercial deal activity rises and unemployment numbers slowly but fairly steadily dip, the economy and the real estate markets still feel unsteady.
Maybe it’s because the middle class continues to struggle.
A report earlier this summer from online listing service Trulia provides a good example of the continuing struggles of the middle class. According to the report, homes in markets across the country have become less affordable for middle-class residents.
In San Francisco, traditionally one of the most expensive housing markets in the country, the median household earns $84,129. Only 14 percent of the homes for sale in this market are affordable to people earning this median income. In Orange County, Calif., only 24 percent of the homes for sale are within financial reach of residents earning the median income, while in New York, only 25 percent of homes are affordable to middle-class residents.
Things are better in the Midwest, of course. Trulia ranks Akron, Ohio, as the most affordable housing market in the country, with 86 percent of the homes for sale affordable to those earning the area’s median income. In Toledo, 84 percent of the homes for sale are affordable to those earning the median income.
There’s even a study out now from Offers.com showing that middle-class residents can’t afford to spend as much on their 4th of July celebrations this year.
According to this survey, U.S. consumers making more than $150,000 a year will be spending the most this Fourth of July. Those earning $50,000 to $74,999, though, will be spending the least. Those making under $25,000 a year say they will be spending less than this group.
So, what do the commercial real estate markets and national economy need for an even bigger boost? A middle class that felt confident in the economy — and, of course, made more money each year — would be key.
