It ain’t the debt

From the NYT:

College Debt and Home Buying

Swelling student loan debt is commonly cited as a primary factor in the declining homeownership rate among 25- to 34-year-olds. But are the two really related?

While homeownership is down nationally since the housing market collapse, the drop among younger adults is particularly striking. Rates in the 25-to-34 age group dropped by nearly 8 percentage points from 2004 to 2013, according to a recent report from Harvard University’s Joint Center for Housing Studies.

Over the same period, student debt soared by more than 400 percent to top $1 trillion — a run-up that dwarfs the surge in mortgage debt during the housing bubble, said John Dyer, the lending practice lead for the Carlisle & Gallagher Consulting Group, which serves the financial services industry. He predicts the debt level will be a drag on home buying for years to come.

“What seems to be happening is you have a pause in your housing pipeline,” Mr. Dyer said. “Where a younger generation would normally be buying homes, it’s just not happening.”

Last year, a study by the Federal Reserve Bank of New York suggested that student debt was suppressing homeownership. Before 2009, the researchers found, 30-year-olds with student loan debt were far more likely to be homeowners than those without it, in part because of their higher levels of education and incomes. But the gap between homeownership rates of 30-year-olds with loan debt and those without began to close during the recession. And by 2012, the trend had reversed.

But Beth Akers, a fellow at the Brookings Institution’s Brown Center on Education Policy, says these findings do not prove a causal relationship. In fact, they could be misleading.

She said she has looked at young-adult homeownership rates over a longer period, and found that the reversal cited by the Fed is “a return to a longstanding trend that existed prior to 2004.” For most of the last 20 years, homeownership rates among young households with student loan debt have been lower, not higher, than rates among households with no debt, she said.

Her research, co-authored with Matthew M. Chingos, a senior fellow at the Brown Center, also disputes the notion that the payment burden is higher on today’s young adults. While the level of education debt has risen over all among young households (ages 20 to 40), the monthly burden of student loan repayment has not increased greatly over the last two decades. From 1988 to 2010, the typical household spent 3 to 4 percent of its monthly income on student loan payments. The monthly burden has remained fairly flat because of offsetting increases in income and longer repayment terms.

Extremely high burdens are still rare. In 2010, about 75 percent of households with people ages 20 to 40 who have education debt owed $20,000 or less, Ms. Akers said. Only 2 percent were carrying more than $100,000.

Perhaps the declining number of young homeowners has more to do with the weak economy and tight lending conditions.

This entry was posted in Demographics, Economics, Employment, Housing Recovery. Bookmark the permalink.

21 Responses to It ain’t the debt

  1. Fast Eddie says:

    Perhaps the declining number of young homeowners has more to do with the weak economy and tight lending conditions.

    So, drop the price of the house. Gas is $3.50 a gallon, food is skyrocketing, property taxes are uncoupled and we’re being nickel and dimed to death. Example: My basic, sh1t cable bill crept up to $200/month. Drop the price of the house. It’s inevitable.

  2. Fast Eddie says:

    Dreadful. Imagine eating bread and water for the rest of your life. We’ll all be dead before this one sells for this price:

  3. Fast Eddie says:

    Go to a 2 year college and then transfer to a state school. That’s the only way to do it. Anything else is just a scam.

  4. NJCoast says:

    Life’s a beach. Enjoy.

  5. joyce says:

    $200/month for basic cable?!?!?

  6. Fast Eddie says:


    Cable/phone/internet. It’s still way too high. Going back to Verizon.

  7. chicagofinance says:

    I said a while ago that once Obamacare passed and then O-man realized that he actually had to negotiate and persuade people with this argument, he gave up and the focus has been on January 2017…….being young and fully capable of enriching himself for years using the Clinton mold……

    Transfuse the Cadaver says:
    July 4, 2014 at 10:51 pm
    Too bad that the real losers are you and me. The fcuktard Bojangles has another half century left to collect speakers’ fees and infect millions more with his special brand of stupid.

  8. chicagofinance says:

    In about a week I am tossing in the towel on Cablevision’s Triple Play……I am moving to Optimum Internet $55, AT&T Wireless stationary phone $20 and DirecTv for $35…….Cablevision is just stiff arming all my attempts to negotiate. No FiOS in my area.

  9. Libturd at home says:

    Back from LBI. The house ended up being a very good deal. There were really only two issues. One, there were no linens for the beds which necessitated a trip to Walmart, but which also resulted in us getting a very durable $12 beach umbrella and two decent quality boogie boards. Second, the water pressure was that of a water gun. Otherwise, would consider renting the joint again next year. Being able to walk to some decent eats, Fanta’C’ Island, the best pizza joint at the shore and four excellent ice cream stands was just a bonus. We were actually about 30 steps from the beach and fortunately lined up with a lifeguard stand too. Booyah!

  10. Libturd at home says:

    And juice was right. The island is not affordable for buying. You could rent the entire Summer for 30 years and still pay less than a mortgage and carrying costs would have cost you.

  11. DuckVader says:

    Fast Eddie,

    Check your cable bill. I get a ton of stuff — more than I can watch — and don’t go above $165. Who’s your provider?

  12. Fast Eddie says:


    It’s Optimum across the board but it’s soon to be Verizon again for the two year deal. They all start out low and keep inching the costs up hoping no one notices. There’s a reasonable price for everything and then there’s a ridiculous price.

  13. Fast Eddie says:

    And I don’t have HBO and all that other sh1t.

  14. joyce says:

    From my experience, when renting a house at the shore (vs a hotel or motel) you always bring your own linens and paper products. Glad you had fun. I still prefer the OBX but obviously that’s much farther.

  15. Libturd at home says:

    Towels we always brought, but the places I’ve been never required the linens. We have them for next time now.

  16. Libturd at home says:

    I’ve been to Duck and liked it, but really dig the LBI scene. It’s a great family experience and no drunken teenagers anywhere. When I was in Ocean City, I was one of those drunken teenagers.

  17. Samivel says:

    Not a bag holder yet.
    Over last year put bids in GR, Caldwell & morris plains.
    Sellers make zero concessions and expect house to sell itself for top dollar.
    This process is taking heavy toll on wife however. I’m just hanging in there.

  18. 30 year realtor says:

    Anyone have any opinions on the future of Bloomfield Center and the impact of Glenwood Village on the surrounding area in both residential and commercial real estate? Thinking of buying a 2 family a block from the train and doing some major renovations.

  19. The future of the US is armed packs roving the countryside and sleeping in the open.

  20. Libturd at home says:

    Dirty year.

    The problem with Bloomfield is the schools. Though a multi near the train might not be a bad investment at the right price. What kind of rents are they capturing? You might attract some young commuters with their first kid in diapers who will stay until kindergarten. Make sure it’s positive cash flow from the get go. Also keep in mind that diesels run down that train line and they are noisy. Do I see the Bloomfield Center project revitalizing Bloomfield? Nope. Do I see it making it impossible for me to get a parking spot at the train station? Absolutely. They’ll be a few nice restaurants that might pop up in the vicinity, but Anthropology and Lul1mon ain’t moving in. Bloomfield is still too ghetto down there.

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