Free Republic
Browse · Search
General/Chat
Topics · Post Article

Skip to comments.

Young Americans delay purchase of homes (uncertain job prospects, student loan cited as factors)
Financial Times ^ | 05/15/2012 | Anjli Raval

Posted on 05/16/2012 9:47:22 AM PDT by SeekAndFind

Andrea Stautberg, 27, and her husband James wanted to buy a house after finishing graduate school in 2009. But in the face of a tough economic climate, uncertain job prospects and $115,000 in student loan payments, the couple instead decided to save money by living with James’s parents in Texas.

They stayed for more than a year – longer than the three months they had planned – before deciding to rent a flat.

“We are looking to buy a house, but have yet to get preapproved,” said Ms Stautberg. “We lived with his parents for as long as we did to pay back our student loans and still save for a down payment.”

The Stautbergs’s story illustrates how difficult it has become for young Americans to buy their first homes, despite low interest rates and years of declining house prices. The number of first-time buyers fell last year – they made up only 37 per cent of home purchases in 2011, down from 51 per cent in 2010 – sapping the struggling US housing market of a traditional source of vitality. High levels of student debt, along with tighter mortgage requirements and stagnant wages, are forcing young Americans such as the Stautbergs to delay purchasing their first homes. Concern about rising student debt levels is growing in the US, and President Barack Obama has sought to make it an election-year topic.

At more than $1tn, outstanding student debt in the US has surpassed auto loans and credit cards as the second-largest source of consumer debt after home mortgages, according to government statistics. Recent university graduates carry an average debt load of more than $25,000 – a burden that may hamper their ability to qualify for a mortgage.

(Excerpt) Read more at ft.com ...


TOPICS: Business/Economy; Society
KEYWORDS: debt; housing; jobs; youth

First-time buyers, usually between the ages of 25 and 34, are an important source of incremental housing demand, as they are at the start of a chain of housing transactions.
1 posted on 05/16/2012 9:47:25 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

One of those Hopey Changey things.


2 posted on 05/16/2012 9:48:26 AM PDT by dfwgator
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

If home prices aren’t rising in their areas yet, buying now is not a smart move.


3 posted on 05/16/2012 9:53:05 AM PDT by Sgt_Schultze (A half-truth is a complete lie)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Well these dumb examples have only themselves to blame. My daughter went to a reasonably priced state school as did her husband. She studied nursing and he studied computer science.

They got out. Rented for about two years while they scrimped and saved and paid off the $15,000 they had in student loans. They don’t drive new cars. They lived on the cheap.

Today they have been in their lovely home (4 bedrooms 3 1/2 baths with 300 sq feet and almost an acre of land) for a year. The only debt they have is their house payment. They continue to save. They eat a bit better than they did but they still watch their pennies.

They just turned 25. I think most of those griping spent too much on college and got useless degrees


4 posted on 05/16/2012 9:55:03 AM PDT by Nifster
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

I read this and go, SO WHAT?

If they paid off $115k in student loans and saved a down payment in a year, as the article implies... they are doing incredibly well.

I also recall that in times past it was common for young couples to live with parents until they got their feet on the ground... so what.

I know of lots of nice houses for 115k in this area. Being able to save cash for a house at that age was just a remote dream.

A whole lot of what I see presented as tragedy these days isn’t a thing to be frantic about. Toughen up.


5 posted on 05/16/2012 9:55:55 AM PDT by Sequoyah101
[ Post Reply | Private Reply | To 1 | View Replies]

To: Sgt_Schultze
If home prices aren’t rising in their areas yet, buying now is not a smart move.

It might be worth it to get a <4% 30 year fixed mortgage if you like the house and prices are close to bottoming out. Any gain in house prices will likely be matched with an increase in interest rates once the economy starts improving again.

6 posted on 05/16/2012 9:57:23 AM PDT by KarlInOhio (You only have three billion heartbeats in a lifetime.How many does the government claim as its own?)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Sgt_Schultze

I am more concerned with the impact on the overall economy.

we all know that the first baby boomers started to retire last year. There will be more retiring this decade.

MOST OF THEIR ASSETS ARE TIED TO THE PROPERTIES THEY OWN ( their house ).

If they need the cash to ensure a more comfortable retirement lifestyle, THEY WILL NEED TO SELL THEIR HOMES and move to a cheaper place. But what if they can’t see their homes at the price they expect because those who should have the confidence to buy ( the young folks ) aren’t buying because they can’t afford the price and have other debts to pay off (e.g. college tuition debt)?

The overall economy gets affected.

That’s another fallout of this entire financial bubble.


7 posted on 05/16/2012 9:58:08 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 3 | View Replies]

To: SeekAndFind
Waiting to buy a house until you can afford it is a very prudent habit.
I seem to remember that this economic downturn started in large part because people did not do that.

8 posted on 05/16/2012 10:00:50 AM PDT by BitWielder1 (Corporate Profits are better than Government Waste)
[ Post Reply | Private Reply | To 1 | View Replies]

To: dfwgator

More propaganda setting the table for Obama’s “I’m going to forgive your student loans” speech in September.


9 posted on 05/16/2012 10:11:46 AM PDT by Buckeye McFrog
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind
... wanted to buy a house ... living with James’s parents ...

In between those two points, there are many other housing options.

If I were James's mother - and I am, although not the James of the article - he would not have the option of returning home, with his life, to live here.

I'll make an exception only in the most disastrous, "gather the clan and arm the perimeter," circumstances, and then only if the wife is a full contributor. James (and Bill, Tom, Pat, Dan, and Frank) had better choose women with some "pioneer life" skills!

10 posted on 05/16/2012 10:25:41 AM PDT by Tax-chick (Remember our veterans, today and every day!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Nifster

“”4 bedrooms 3 1/2 baths with 300 sq feet and almost an acre of land””

???? I’m not going to say a word as I hate nitpickers!


11 posted on 05/16/2012 10:46:40 AM PDT by Thank You Rush
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

“If they need the cash to ensure a more comfortable retirement lifestyle, THEY WILL NEED TO SELL THEIR HOMES and move to a cheaper place. But what if they can’t see their homes at the price they expect because those who should have the confidence to buy ( the young folks ) aren’t buying because they can’t afford the price and have other debts to pay off (e.g. college tuition debt)?”

Who cares. If the young people don’t make enough to own a house - that’s not going to effect me. They are just lazy bums who need to work harder and then everything will fall into place. ;)

Good to see someone sees it. Most young people are not making enough to buy a house under any circumstances. This means that prices are going to freefall until they can afford to buy under whatever income they do manage to earn.

Supply and demand, simple as that. If you stiff young people by not paying them very much - you raise the value of money vs goods, and contribute to deflation. This means that you aren’t going to be able to charge as much in the future.


12 posted on 05/16/2012 11:03:39 AM PDT by JCBreckenridge
[ Post Reply | Private Reply | To 7 | View Replies]

To: KarlInOhio
I can't see mortgage prices rising appreciably. The government has to keep interest rates artificially low as the impact on interest service would balloon given our tremendous outstanding debt. If our interest rates doubled or tripled, taxes would have to increase or transfer payments would have to be curtailed, or both. The perceived party in power will get massacred.

I think we may be too extended for any correction except for a catastrophe.

13 posted on 05/16/2012 11:29:27 AM PDT by Sgt_Schultze (A half-truth is a complete lie)
[ Post Reply | Private Reply | To 6 | View Replies]

To: SeekAndFind

I agree with you. This generational hand-off is going to be a vexing problem.


14 posted on 05/16/2012 11:31:00 AM PDT by Sgt_Schultze (A half-truth is a complete lie)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Thank You Rush

My fingers forgot to add the extra zero....should be 3000 square feet for the living quarters


15 posted on 05/16/2012 2:42:15 PM PDT by Nifster
[ Post Reply | Private Reply | To 11 | View Replies]

To: Thank You Rush

“”4 bedrooms 3 1/2 baths with 300 sq feet and almost an acre of land””

???? I’m not going to say a word as I hate nitpickers!

Large baths, huh?


16 posted on 05/16/2012 2:58:54 PM PDT by Joan Kerrey
[ Post Reply | Private Reply | To 11 | View Replies]

To: Sequoyah101

That’s what I was thinking. “Gee, folks wait to buy stuff? That’s never happened before!”


17 posted on 05/16/2012 3:00:09 PM PDT by Larry Lucido
[ Post Reply | Private Reply | To 5 | View Replies]

To: SeekAndFind

By the logic in your post, every act of thrift has ripple effect that cause someone else someplace to go without. Ergo, I can’t be thrifty.

I reject that logic.


18 posted on 05/16/2012 3:02:45 PM PDT by Larry Lucido
[ Post Reply | Private Reply | To 7 | View Replies]

To: Larry Lucido

OK, explain to me how Baby Boomers can sell their homes without someone SPENDING MONEY to buy them.


19 posted on 05/16/2012 3:07:19 PM PDT by SeekAndFind
[ Post Reply | Private Reply | To 18 | View Replies]

To: SeekAndFind

They can’t. They will have to accept the market price. What I reject is the premise that there’s anything wrong (or of concern) with that.

No one has a “right” to have a house appreciate the way they would have liked it to.

Yes, those folks won’t have as much to spend. But others who practice thrift will have more to spend on other things at other times. Or to just save and invest.


20 posted on 05/16/2012 4:35:33 PM PDT by Larry Lucido
[ Post Reply | Private Reply | To 19 | View Replies]

To: Larry Lucido

RE: They will have to accept the market price. What I reject is the premise that there’s anything wrong (or of concern) with that.

1) I concur that they’ll have to accept the market price. Which of course means a less comfortable retirement. Many boomers have depended on the value of their houses going up and selling them at a large profit for their retirement.

2) You will notice that I never said there’s anything wrong with that, I simply MADE AN OBSERVATION as to its ensuing effects.

THRIFT ( saving your money ) is a thing to be praised. However, behind this thrift is one underlying assumption -— The assets you depend on to rise in value, will grow BEYOND INFLATION. That has clearly NOT been the case the past 10 years unfortunately.

Hence, the sad situation many baby boomers find themselves in today.


21 posted on 05/16/2012 5:09:53 PM PDT by SeekAndFind
[ Post Reply | Private Reply | To 20 | View Replies]

To: SeekAndFind

Point noted.


22 posted on 05/16/2012 5:21:57 PM PDT by Larry Lucido
[ Post Reply | Private Reply | To 21 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
General/Chat
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson