More student debt, fewer homeowners
FinAid's Student Loan Debt Clock is just as alarming, in its way, as those clocks that relentlessly tick up the national debt.
The FinAid clock is fast approaching $1 trillion, ratcheting up at the pace of nearly $3,000 per second. Americans owe more on student loans than they do on their credit cards, a switchover that happened last year.
Consider that the amount you can borrow to buy a home depends not only on how much you earn but also how much debt you already have, and you can see what the student-loan boom has to do with the housing market.
Rick Palacios Jr., senior research analyst at John Burns Real Estate Consulting, wrote recently that homebuilders should beware.
"Faced with mounting student loan debt, poor job prospects and stagnant wages, an increasing amount of 25 to 34 year olds (a prized demographic for the housing sector) have moved back in with their parents," he wrote.
According to Palacios, the number of adults in that age bracket living with parents is up 26 percent since the Great Recession started in late 2007. They're now nearly 6 million strong.
"Today's 36.8% homeownership rate for 25 to 29 year olds is at its lowest level since 1999, and homeownership for 30 to 34 year olds is at its lowest rate in 17 years," he wrote. "The good news is that this pent-up demand will ultimately provide a much needed boost to the housing sector. The bad news is that the boost will be heavily skewed to the rental market as it will take longer than ever for young people to qualify for a mortgage, especially if more and more graduates are hit with credit blemishes from unpaid student debt."
No wonder apartment owners and developers are feeling pretty good right now.
What's your student-loan situation? Do you have any? Are you making good progress paying them off?
Are they influencing where you live?
If so, do you care?