With home prices and mortgage rates at their lows, it seems like the perfect market for young people to buy. What's holding these young families from buying a home is they are still paying off their student loans. The consumer Financial Protection Bureau says U.S. students have amassed $1.1 trillion in load debt- double what it was in 2007 and greater than any other consumer debt not tied to a mortgage.
This effects the market overall because we will see a decrease in the number of first-time home buyers.
First time home buyers usually make up more than 40% of the market, during the recovery this number has dropped to below 30% (National Association of Realtors). Many of these young families and students are forced to rent or move back in with their parents.
Most young adults face up to $100,000 in student loan debt. An estimated 1/3 of student loan borrows are late on their debt payments, according to the Federal Reserve report. This will affect their credit score, and their future mortgages. Many of the jobs that highly educated young adults are coming out with after their education, are working minimum wage jobs. The Center for College Affordability and Productivity reports that almost 50% of the college graduates from class of 2010 are in jobs that don't require a bachelors degree, while 38% are in jobs that don't even require a high school education.
Now, the Federal Reserve Bank of New York has found evidence that student loan debt may prevent a large chuck of an entire generation of college graduates from securing a mortgage and owning a home. Bloomberg, report that 2/3 of student loans are held by Americans under age 40. From the third quarter of 2012 to the fourth quarter, the number of people in that age group who own homes fell by 4.6%, the steepest drop since 1982.
No comments:
Post a Comment