Student Loan Debt is Crippling the Housing Market

Posted by Steph Kaye on Wednesday, February 26th, 2014 at 12:23pm.

 A Little Help Here Uncle Sam

Last week, the Federal Reserve of New York released their Household Debt and Credit Report, including national debt data in regards to mortgages and student loans. Student loan debt was reported at a total of about $1.08 trillion in the fourth quarter of 2013. This is much higher than credit card and mortgage debt, and is a more than 5 % increase from the 3rd quarter of 2013.

 Student loan debt is a serious problem in the U.S. and is going to be yet another hurdle for the housing market to overcome. Faced with mounting student loan debt, poor job prospects and slow rising wages, an increasing amount of 25 to 34 year olds ( important demographic of the housing sector ) have moved back in with their parents. Almost 6 million 25 to 34 year olds now live with mom and dad, up 26% from when the recession started in 2007. Today's home ownership is 36.8%  for 25 to 29 year olds, the lowest since 1999, and homeownership for 30 to 34 year olds is at its lowest rate in 17 years. 

Whether graduates have a "useless" degree in liberal arts or a "practical" degree like an MBA, they are all being confined by their student loans. Their jobs aren't helping pay down that debt, either, as roughly 284,000 college graduates are making minimum wage and The Center For College Affordability and Productivity reports that nearly half of the college graduates from the class of 2010 are in jobs that don't require a bachelor's degree and 38% of graduates have taken jobs that do not require even a high school diploma.

 College graduates have debt averaging $25,000. The debt load is so high, and the job outlook so bleak, that student loan default rates have almost doubled. In fact, the only one who seems to be making more money as a result of taking on student loans the is The U.S. Government, whose Education Department made more than $100 billion from student loan debt last year, due to low government borrowing costs and fixed interest rates on these loans. 

In a market where there are three applicants for every job and half of the 37 million people with student loans are deferring payments, the job advantages a degree offers today outweigh the likelihood of owning a dream home in the future. While forclosure rates decrease, housing supplies dwindle and home prices rise, already strapped graduates are seeing rates on some privately issued student loans jump to nearly 12%. Despite their debt, college graduates earned a median weekly income of $1,066 in 2012, compared with $652 for someone with a high school diploma, according to the Bureau of Labor Statistics.


If you would like information on your local real estate market, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.

Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.




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