HUD Examines Housing Opportunities for Young Adults Repaying Student Debt

Posted by Steph Kaye on Monday, May 23rd, 2016 at 10:38am.

For young adults who are repaying student loans, home ownership seems like a distant dream.  U.S. Housing and Urban Development Secretary Julian Castro recently announced some of the regulatory changes coming soon to ensure housing opportunities exist for younger generations, specifically for those who are struggling to repay student loans.  

While hard work, building up a solid savings account, and personal investment via higher education have always been stepping stones to the American dream, increased costs for education seem to be getting in the way of achieving that dream.  

Castro states that HUD is committed to exploring changes which will help more Americans purchase a home and, in November of last year, the Federal Housing Administration Principal Deputy Assistant Secretary, Ed Golding, announced changes to condo rules that would address a lengthy and complex recertification process, owner-occupancy requirements, and limits on the types of property insurance coverage accepted by FHA.   The condo rules will soon be published in the Federal Register.

This has been a long-fought win for realtors who know that condos are great, affordable options for first-time buyers.  Professional realtors exist to make the dream of home ownership come true and HUD appears to be committed to partnering with real estate agents in order to ensure that such hard-won progress continues to grown within the housing market for years to come.  

In addition to to affordability concerns, inventory shortages and lifestyle factors (i.e. marrying later in life and repayment of student loan debt) are burdening a segment of creditworthy buyers making it more difficult to save for a down payment.

Income-based repayment options and accountability for loan servicers during repayment processes will help to ensure relief for those struggling financially with their debt load.  Graduation from college and home ownership are major pillars of the American dream which should complimet one another rather that compete with each other.  

Student debt has defied the current business cycle of the past 10 years. Debt from auto loans and credit cards (non-mortgage debt balances) declined during the immediate aftermath of the Great Recession and have either flatlined or rebounded at a very gradual pace in recent years. Student balances seemed to be the exception during this time and those balances increased from over $300 billion at the end of 2004 to over $1.2 trillion debt today.  Carrying high student loan debt is resulting in the reatreat of young student borrowers from the housing market causing them to co-reside with their parents.

In a survey conducted by the National Association of Realtors reviewing data of actual homebuyers and renters, millennials comprize the largest share of buyers among all generations despite their debt load.  Over 90% currently renting desire to achieve home ownership at some point in the future.  Saving for a down payment is the challenge for hopefule buyers due to rising home prices and increasing rents.  Repaying student loan debt doesn't help the situation and is causing further setbacks of up to five years.  

In addition to Congress passing legislation helping to ease debt burdens for borrows, a professional real estate agent plays a large role by working with young clients at the beginning stages of their housing requirements, especiallyin dealing with the leasing processes when renting their first place.

Realtors are resourceful advocates for clients repaying student debt  in working to educate regarding housing options and credible resources.  

If you'd like to learn more, please don't hesitate to message Lang Premier Properties online or call us at 1-855-526-4466.

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