(Fox Business) Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home, one expert discusses.
“I think most of us in America would define the middle class as somebody who can work a 40-hour-a-week career and can have the income to purchase the average home in America,” Freddie Smith, an Orlando realtor and TikTok creator, told Fox News Digital.
The TikToker, whose videos explore millennial and Gen Z struggles to afford a home and the general cost of living in today’s economic climate, dissected the common factors of living a middle-class existence.
“A lot of us grew up middle class, and we watched what middle class was in the 80s and 90s as millennials. And nowadays, what has moved the goalpost more than anything is the housing market,” the relator said.
Home in Summerville listed for $765,000. (Jeff Cook Real Estate LPT Realty / Fox News)
Smith explained how, just a few years ago, $60-$70K a year would have been sufficient to qualify for a home.
With the average cost of a house being around $400K-$420K in 2024, people’s salaries would need to be around $120K a year for people to even qualify, Smith explained.
The realtor highlights how this wage-to-housing gap has forced many people to rent for a longer period.
“Rent prices are taking up 30-40% of people’s income, making it harder for them to save for a house. So it’s this perpetual cycle that is keeping people out of the middle class,” he explains, noting this trend has been continuing at a rapid pace over the last few years.
Smith also explained how a $120K salary, even without children, becomes a far lower number when confronted with the crippling debt most Americans are facing today.
@fmsmith319Is 100k salary the new middle class? 🤔🏡♬ original sound – Freddie Smith
“Most people are carrying student loan debt, which is at an all-time high, and the average payment in the country is $500 a month for your college degree. [There are] some people I’m seeing in my comment section saying ‘$500, I wish, it was $1,200 a month for me’,” said Smith.
Credit card debt is also at a record high in America, and while Smith acknowledges that reckless spending could be a factor, he has learned from many Americans commenting on his posts that many are forced to use their cards for groceries because they ran out of money.
According to DQYDJ, the average American income in 2023 was roughly $69K a year, with only 18.8% percent of Americans reaching $100K or more a year. According to the same source, the top 10 percent of individual earnings started at $135,605 a year.
The middle class is in a segmented state, Smith argues, largely determined by how much debt one finds themselves in.
“If you are someone who bought a house before 2020 and you have it paid off or you have a 3% interest rate, you are not burdened by the housing costs like the 2024 adults are now,” the relator said, explaining how debt, especially college debt, housing costs and childcare are burdening millennials and Gen Zers starting their lives.
