Student-Loan Debt Keeps Buyers Out of
As we hear that Congress struggles with the "student loans" question, it is good to put it in perspective with a few facts. I thought the article below was kind of important to keep in mind.
The impact of student-loan debt on the nation's housing
market has real estate analysts worried due to the importance of first-time
buyers to the health of the market. Questions linger about whether the housing
recovery will be limited as deeply indebted college graduates struggle to
stabilize their finances, which means young, first-time purchasers are not
entering into homeownership at traditional rates.
According to the NATIONAL ASSOCIATION OF REALTORS®, first-time buyers
comprised just 28 percent of purchases in the resale market during May. For
comparison, typically these buyers make up 40 percent of purchases. The lower
rate is not surprising when one considers the statistic that college graduates
on average carry $21,402 in student loan debt, and troublingly, only 39 percent
are in a capacity to repay. Clearly, many college graduates have no choice but
to postpone the purchase of a home due to heavy debts from student loans.
The homeownership rate for those individuals who are still paying off
student loans is 36 percent lower than among their peers who have no student
debt, according to research from the One Wisconsin Institute.
Student-loan debt will remain a long-term issue because the average payoff
time is 21 years, ranging from 17 years for those who attended college but did
not get a degree to 23 years for those with graduate degrees.
The country’s total outstanding student debt has surpassed $1.1 trillion.
For recent graduates, the debt load averages just under $27,000, but an
estimated 13 percent of outstanding balances range from $54,000 to $100,000.
Read the full story on the Los Angeles Times article from Kenneth R. Harney, 6/28/13.
Do you have any thoughts on the subject? Feel free to chime in!
“Is this a safe neighborhood”? ... is a question that we as Realtors® often hear from clients. (side note: a Realtor® is a real estate agent who is a member of the National Association of Realtors®, who adheres de facto to a very strict code of ethics - not all agents are Realtors®). What people typically do not know is that as Realtors®, we are not allowed to answer such a question: it could be construed as discrimination. Also, the opinion about how safe an area is can be so personal and relative!
I find that the best way to answer such a concern is to
advise my clients to come back at different times of the day and walk around in
the neighborhood, and talk with the neighbors as much as possible. I would add that I believe it is always a
good idea to do so, no matter how pretty or ugly an area may look. You can learn a lot about a street, a block
or a group of blocks by talking with the people living directly in the area.
Finally one has to remember that conditions change all
the time: I live in an area that is fairly uneventful when it comes to crime,
except that in the past few weeks there have been a well publicized increase in
break-ins and thefts in that general part of Mountain View.
So the best way to answer such a question is to check for yourself with
the police department and get a crime report, to talk to the neighbors (who
will often tell you a lot about what happens nearby - and sometimes more than
you want…), and also look at some internet resources on the subject. Here are, below, some of the sites that I have come
across in the past; but I recommend to check carefully how they collect their information, and what exactly they cover and do not cover.
information may also be found in the local newspaper. For instance in the Mountain View
Voice under "Crime Brief" or "Police Log", and for Palo Alto "the Pulse" (PA Weekly). Each local paper has a similar section. One may need to check the evolution over a period of time to better judge a neighborhood.
To piggy up on my last blog (is the market slowing down?) here is the evolution of sales prices of houses and CID's (common interest development = condos and townhouses).
These graphs that I just pulled show the amount of increase in average prices in a year and a half, and illustrate how indeed this is a factor in a possible slow-down of the activity.
They also show something that is unusual: prices did not really go down a lot at the end of 2012. On previous studies I showed how prices really adjusted towards the end of the year, in 2011 and 2010. But the market stayed strong at the end of 2012.
Finally these graphs show that indeed prices are (somewhat) flattening at this point, at least in the case of the County of Santa Clara.
If you have any area of interest, very local or at the City level, let me know and I will publish it for you.