Destruction of America’s Middle Class: Mortgage Applications Hit 14 Year Low As Home Affordability Declines

America’s middle class is having a difficult time. They are not sharing equally in the Fed-induced stock market surge and real median household income is the lowest since 1995.


Rising home prices (albeit slowing), stagnant wage growth and rising mortgage rates are leading to a decline in home affordability.

Take the National Association of Realtors Homebuyer Affordability Index. You can see that UNaffordability peaked in 2006 when home prices peaked and real median household income was recovering from the 2001 recession.


You can also see that AFFORDABILITY peaked in 2012 after home price declined and mortgage rates hit a low since 2000. Unfortunately, real median household income had also fallen preventing a true housing recovery.

Mortgage purchase applications remain at a 14 year low (like real median household income, mortgage purchase applications are back to 1995 levels). This results in an affordability gap due to rising home prices, rising mortgage rates and declining/stagnant income.


Unless members of the American Middle Class over substantial holdings of the S&P 500 and/or Commercial Real Estate, there massive Federal Reserve asset purchases and interest rate repression scheme has NOT helped the Middle Class.


Is loosening credit standards the answer? Do you think Federal housing policy should heap MORE debt on households that are already suffering from the aftermath of a housing/credit bubble that burst? I would say no.

The solution is not more debt, it is adopting policies that allow that economy and wages to grow. Not stifle recovery.

So, like in the movie “The Incredible Burt Wonderstone,” we have succeeded in making the Middle Class disappear!



Federal Debt Increased By Over $1 Trillion Since Sept ’13 And $6 Trillion Since Dec ’08 (Wage Growth Down 42%, Real Income Down 4.6%)

Well, the US Federal government has certainly been on a tax, borrow and spend spree since 2009. Just since September 2013, US Federal debt has increased by a whopping, mind-numbing $1.1 trillion. And since December 2008, Federal debt has increased by $6 Trillion. That is a 66% increase in Federal debt since President Obama took office.

And how have wages done with $7.5 trillion in Federal government borrowing? Average wage earnings growth are down 42%. And real median household income is down 4.6%.


According to the NBER, the recession ended in June 2009. But Federal debt continued growing, wages kept falling along with mortgage purchase applications.

If we go back to 2007-2008, Federal government debt had begun to soar. Bailouts, stimulus (that didn’t work), continuing wars, etc. are very expensive … and non-productive.

So, $6 trillion in borrowing since 2009 and wage growth down 42% and real median household income down 4.6%. Spiffy!

So, where has all the money gone? Not into the pockets of the American middle class.


Like the scene in the movie “The Incredible Burt Wonderstone” where Stephen Gray tries to drill a hole into his head … and not have any side effects … The Obama Administration and Congress are hoping to spend, spend and spend and NOT have any side effects. Like having citizens pay back the debt.


Fed: Median Incomes Fell for All But Richest in 2010-2013

The Federal Reserve has finally verified what I have been saying since 2008: there is no recovery for anyone other than the wealthiest Americans.

Sept. 4 (Bloomberg) — Only the rich saw their incomes benefit from the economic recovery during 2010-2013, as earnings stagnated or fell for all others, a report from the Federal Reserve showed today.

Median income adjusted for inflation rose 2 percent to $223,200 for the wealthiest 10 percent of households from 2010 to 2013, the Fed said today from Washington in its Survey of Consumer Finances. The bottom 60 percent saw the biggest declines.

The improvement in consumer finances has become increasingly stratified during the recovery, thanks in part to gains in the stock and housing markets that have been boosted by the Fed’s unprecedented stimulus. Meanwhile the labor market has been slower to progress, with wages remaining stagnant for many workers, aggravating the disparity in income.


The report “reveals substantial disparities in the evolution of income and net worth” since 2010, Fed economists wrote.

The median, or mid-point, income for all families fell 5 percent from 2010 to 2013, while mean, or average, income climbed 4 percent, the data show. That’s “consistent with increasing income concentration during this period,” the report stated.

Median net worth fell 2 percent to $81,200 from 2010 to 2013, while mean net worth was little changed at $534,600.

The answer? The Fed keeps on with its zero interest rate policies (ZIRP). Brilliant!