Achieving the quintessential middle-class life and homeownership now demands an annual income of $120,000, marking a significant shift from past norms. Orlando realtor and TikTok creator, Freddie Smith, explores the economic challenges faced by millennials and Gen Zers shedding light on the evolving landscape of the American Dream.
Smith reflects on the changing definition of middle class emphasizing how the housing market, with an average home cost of $400K-$420K in 2024, has drastically raised the bar. A few years ago, $60-$70K sufficed for homeownership.
The wage-to-housing gap forces many into prolonged renting, with rent consuming 30-40% of incomes, creating a cycle that impedes middle-class entry, notes Smith.
Even a $120K salary essential for homeownership becomes challenging when weighed against soaring student loan and credit card debts, underlining the broader financial struggles faced.
Debt’s Role in Class Segmentation
Smith contends that debt especially from housing, college, and childcare, significantly determines one’s middle-class status. Those without these burdens enjoy a more comfortable financial position.
The middle class is segmented, with individuals who bought homes before 2020 experiencing a different economic reality compared to millennials and Gen Zers burdened by current costs.
Smith unveils the trend of communal living to combat high housing costs, where families pool resources and share homes, highlighting the adaptability of younger generations.