MIDDLE CLASS IN DECLINE - Less house for more money

Marianne Gillespie

Housing for the middle class may not be what it used to be years ago.

The stereotypical middle class home with a white picket fence, two-car garage, three bedrooms, and maybe two bathrooms, was paid for on one person’s income.

Nowadays, two people often  work to pay all the bills with a house.

“Anymore, for almost 80 percent of homebuyers, it takes two to make it work,” said Irvin Latta, broker/owner of Latta Realty.

Latta said he gets almost a call a day in his Chillicothe office of people wanting to rent.

“I think more and more people are wanting to rent,” said Latta.

He said he thinks it may be because residents are struggling financially, which makes it harder for them to qualify for a loan.

Some, he said, are good people, but did not protect their credit scores when they were younger, and now their past haunts them.

Being relatively new in the real estate business, Latta said he has no statistics to back up his theories, but he is sure about one thing.

“It’s getting harder for the average person to make ends meet,” Latta said.

Being able to pay a mortgage and all the other bills may stretch middle class families’ dollars.

“Prices continue to go up,” said Sandy Glover, broker for Coldwell Banker. “The middle class is going to be getting less house for more money.”

Homebuyers may be forced to make hard decisions about their future home.

“Real estate is location, location, location,” said Glover. “But schools are a big deciding factor.”

“I’ve been surprised by how important a school district is,” said Latta. “It is more important than I thought it was.”

Becky Peterson, president of the Peoria Association of Realtors, said she thinks there is enough housing for middle class families in Central Illinois.

“As far as home prices, middle class people can definitely buy a home,” Peterson said, adding the housing climate is not like Chicago or another big city.

The combination of location, price and schools determines where homebuyers, ultimately, find their home.

“Needs and price are going to determine where you’re going to find that house,” said Peterson.

She said it is very important for homebuyers to determine their needs and wants.

“There is a lot of decision making that goes into buying a home,” said Peterson.

Homebuyers looking for a three bedroom, full basement in the price range of $80,000 to $125,000, most likely will not find it in Washington, Morton or Dunlap, Peterson said.

But that does not mean a home cannot be found in another area, and the same can be said for new, or newer, construction.

New construction may elude some middle class families, depending on what people define as middle-class housing.

For example, Latta sells homes mainly in the Chillicothe area. One of the area’s newest subdivisions, RiverSound, may have some homes selling at $160,000, but many others are $180,000 to $190,000.

Glover said middle class families, can still find new construction, or newer construction, in locations such as East Peoria or Washington rather than Morton, Groveland or Tremont.

Regardless of location, buyers need lenders, though, who may have been more lenient in the past, Glover said.

But today lenders are requiring  a larger downpayment and better credit.

“It’s a little harder to overextend yourself today,” Glover said.

The rules have changed. Latta said whereas in the past, homebuyers would find a home and then be approved by a bank, now buyers need pre-approval and then find a home.

“Our housing is not out of reach for our middle income,” said Peterson.

“The affordability index is right where it should be.”

Peterson pointed to June statistics for the association.

Out of 480 residential homes sold, not including condominiums, 132 homes were between $100,000 and $160,000, or about 28 percent.

Finding an affordable home is one thing, but Peterson said real estate taxes are too high.

Despite the middle class struggles, Midwest and, specifically, Central Illinois homes, are much more stable than those in more metropolitan areas.

Realtors point to more steady housing prices than in other areas.

Barb Smith, manager and broker with RE/MAX, said the median price of home sales now is at $130,000.

According to the 2000 U.S. Census Bureau, the median value of homes in the United States was $119,600.

“We’re busy,” Smith said. “It’s just not as bad as what you’re hearing from other areas of the country.

“We, in the Midwest, don’t have huge markups from year to year, so therefore, we’re not having things go down in price. We show to lots and lots of different income groups and different pricing.

There are lots of buyers out there.”