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Middle class slowly being squeezed out of housing market

Middle class slowly being squeezed out of housing market

By Paul Nelson | Posted - Aug. 26, 2013 at 8:39 a.m.

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SALT LAKE CITY — While rising home prices may be an encouraging sign for the housing market, some industry insiders say there is a downside to it.

Some analysts say, in a way, the middle class is slowly being squeezed out of the housing market.

"Incomes are fairly stagnant," said Republic Mortgage Loan Officer Al Bingham. "They're increasing, but nowhere near (enough) to help them buy a house."

Bingham says many first-time home buyers ask for assistance from the Federal Housing Administration, but the FHA has made some changes.

"The FHA has come and doubled their (upfront) mortgage insurance premiums. Secondarily, they've lowered their debt ratios," he said. "Before, you could get loans approved at higher debt ratios. Today, you can't get that."

Incomes are fairly stagnant. They're increasing, but nowhere near (enough) to help them buy a house.

–Republic Mortgage Loan Officer Al Bingham

With insurance premiums up, Bingham says monthly payments could go up by a couple hundred dollars.

"It increases their payment dramatically and reduces the amount they can qualify for," Bingham said.

Also, he says credit score restrictions really haven't eased up since the economy took a downturn roughly five years ago.

"The credit score requirement for home buyers has gone up a lot," Bingham said. "You have people with below 700 credit scores. They're getting nailed with higher interest rates and more costs."

The index lists the average home as having a value of just over $221,000. Compare that to $189,000 when home values dipped in October of 2011.

Paul Nelson


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