As the country\’s total college debt passed the $1 trillion mark and overtook the total credit-card debt for the first time, the repercussions are now being felt within the housing market, as first-time homebuyers are limited in their options with regards to taking out mortgages.
Recent college graduates carry an average debt load of more than $25,000, limiting their ability to qualify for mortgages even if they\’re able to land employment in a market by having an unemployment rate of 9?percent for 25- to 34-year-olds, writes Bob Willis at Bloomberg.
As recent Fed data shows, during the last ten years the amount of 29- to 34-year-olds getting a first-time mortgage had decreased by 8 percent.
Fed Chairman Ben Bernanke said:
\”First-time home buyers are typically an essential source of incremental housing demand, so their smaller presence on the market affects house prices and construction quite broadly.\”
John Rao, v . p . of the National Association of Consumer Bankruptcy Attorneys, said:
\”Just as the housing bubble created a mortgage debt overhang that absorbs the wages of consumers and renders them not able to engage in consumer spending that sustains the economy, also are student loans beginning to have a similar effect, which is a continue the economy for that foreseeable future.\”
Rick Palacios, a senior research analyst at John Burns Real Estate Consulting, said:
\”Students appearing out of college are burdened with increased debt than traditionally they\’ve been, and they are also coming into an economy that is underperforming previous recoveries.\”
\”Move-up buyers need somebody to buy their homes to move. You need that first leg in the recovery to materialize.\”
While people aged 25 to 34 still take into account 52?percent from the overall number of first-time home buyers, teenagers who are beginning to move out of their parents\’ houses want to rent, not purchase.
And that\’s if they can get out of the parental home. Almost 6?million Americans in that group endured their parents in 2011, up from 4.7?million when the recession began in 2007, according to U.S. Census Bureau data.