Posted on 06/25/2013 1:04:24 PM PDT by SeekAndFind
The housing market has been dealt a further setback, as it is revealed that student debt is stifling the ability of graduates to get mortgages.
As the country’s total college debt passed the $1 trillion mark and overtook the total credit-card debt for the first time, the repercussions are being felt in the housing market, as first-time homebuyers are limited in their options when it comes to taking out mortgages.
Recent college graduates carry an average debt load of more than $25,000, limiting their ability to qualify for mortgages even if they’re able to land a job in a market with an unemployment rate of 9 percent for 25- to 34-year-olds, writes Bob Willis at Bloomberg.
As recent Federal Reserve data shows, over the last ten years the number of 29- to 34-year-olds getting a first-time mortgage had decreased by 8 percent.
Fed Chairman Ben Bernanke said:
“First-time home buyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly.”
John Rao, vice president of the National Association of Consumer Bankruptcy Attorneys, said:
“Just as the housing bubble created a mortgage debt overhang that absorbs the income of consumers and renders them unable to engage in consumer spending that sustains the economy, so too are student loans beginning to have the same effect, which will be a drag on the economy for the foreseeable future.”
Rick Palacios, a senior research analyst at John Burns Real Estate Consulting, said:
“Students coming out of college are burdened with more debt than traditionally they have been, and they are also coming into an economy that is underperforming previous recoveries.”
“Move-up buyers need somebody to purchase their homes to move. You need that first leg in the recovery to materialize.”
While people aged 25 to 34 still account for 52 percent of the overall number of first-time home buyers, young adults who are starting to move out of their parents’ houses want to rent, not buy.
And that’s if they can get out of the parental home. Almost 6 million Americans in that group lived with their parents in 2011, up from 4.7 million when the recession began in 2007, according to U.S. Census Bureau data.
Setting up a titanic lobbying battle between the Real Estate Industry and the Education Crowd over who gets the money.
This can’t end well.
Kind of the same way not having a “college debt” prevents NON-graduates from buying houses too.
Silly me... I thought that lack of employment was the main problem.
Isn’t there a long pause between college and buying a home - like having a job first? What are their job prospects?
If you could figure out a way for the Insurance Industry to join in, I’d watch on pay-per-view.
Silly me, also.
Well then they shouldn’t have borrowed money.
Since when have “recent college graduates” had realistic expectations of buying a house? Pay off the (average) $26K in debt during the first five years of post-college employment, establish yourself on a career path, and only then think about buying a house, like every other generation since World War II.
Looks like 0 will come to the rescue and absolve the college debt of these students and have the rest of us pay for it. Just another illegal way to spread the wealth.
“college debts prevent graduates from buying houses”
so what?
you run up a debt .. you were permitted to run up a debt, you were entrusted with other people’s money.... and you got to do what you valued most ...when you wanted to do it.... you got your tuition fees paid for you (and possibly you also ate on the borrowed funds)
now you have to pay it back? cry me a river! that was your bargain. nobody forced you to borrow the money, just as nobody forced you to go to the expensive college. Lots of good honest people go to community college and maybe state university and do just fine with their lives. you wanted to go to that exclusive, expensive swank school? OK, you got to do it! Smile and be happy about it!
you should be happy you were trusted with Other Peoples’ Money when you had no means of repaying it, too.
be happy you got what you asked for.
it takes some graduates a few years to pay down their college debts before they can go out and buy expensive things like houses and cars. so what?
that’s life. and a pretty damned good life, too. you got to use other people’s money to do just what you wanted.
stop bitching and start growing up a little bit.
pay your bills like a grown-up. stop crying like a little baby
or something like that
True story - son of some dear friends paid his way through TCU, has worked since before graduating, married with two kids, six-figure income and no debt a la Ramsey. He tried to get a mortgage and they denied him because he didn’t have good enough credit (because he had NO credit, paying his bills on time and in full). Whiskey Tango Fox?
Really, what does a kid at 23-28 need with a 2000+ sq ft house when they make less than 60K, no savings, college debt, and just bought a new car?
The wife of a young engineer I work with had $130k in debt when she left college and no, she did not find a job in her field. It is their roadblock to buying a home.
Ditto !!!! I’m sick of the whining too.
A spoiled generation.
.
“If you could figure out a way for the Insurance Industry to join in, I’d watch on pay-per-view.”
As far as I can tell ... the homeowners insurance industry is making out fine. My rates are up 52% in three years. Most folks ARE FORCED to pay for h/o ins. No free market there.
No shortage of leeches waiting to suck away any excess productivity.
I think the argument is that you need a huge college debt so you can eventually afford a huge mortgage debt. :)
A lot of sell financing going on ...
A lot of seller financing going on ...
sorry
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