Home Prices and Debt–Crippling Post-Graduates

Tougher times cause everything to shift in one direction or another. The housing crisis, that long lasting thorn in America’s paw, is causing the real
estate market to have a major gimp in it’s stride. Recent college graduates have long chased the American dream of finishing the arduous task of
schooling, landing their dream job and naturally progressing into home ownership. It is the mounting pile of student debt that comes with achieving the
increasingly required schooling necessary for snagging the dream job that is preventing college grads from adding the status of homeowner to their
lives. It now seems that student debt is an additional thorn in America’s paw that will only lead to further crippling America’s real estate market.

Today, outstanding student debt has surpassed credit card debt in America. Students are leaving with an average of over $25,000 in debt, which prevents them from receiving mortgages because lenders are being stricter with qualifications required to receive a loan. These recent graduates are starting further and further behind as the debt of schooling and education continues to rise; if they are unable to find a job out of school, it further slows their progress, making that hole even harder to emerge from.

The numbers are continuing to slide against the recent college graduates. The unemployment rate of people 25 to 34 is about 9 percent. Right now,

people 25 to 34 make up 27% of homeowners, but a decade ago they made up 33%. In the span of a decade (2001 to 2011) only 9 percent of 29-34 year old Americans qualify for mortgages, whereas ten years ago 17% qualified. But where are these people living? About 6 million people between 25 to 34 are living in their parent’s homes, up from 4.7 million in 2007 when the tough economic period started.

This caustic mix of high unemployment and high amounts of debt will undoubtedly have a cascading effect later in America’s future. When the current poor economic conditions started in 2007, it caused many Americans to go back to school, which added to the total of outstanding student debt. With interest rates for mortgages at very low rates, it would seem that it should make the housing market boom, but the additional student debt has held many people back. With fewer and fewer homes being filled by the 25 to 34 demographic, these houses will sit unsold, slowing down construction and housing industries and possibly adding to unemployment in that sector.

With America’s economy going through tough times, the news of recent grads struggling not only in the job market but also in the housing market doesn’t give many people hope for change for a better chance at achieving their version of the American dream. With the election year upon us, it’ll be interesting to see what is proposed to help homeowners and students alike.