Go Getters - Tend to be a little older and more established than
younger households.
«I don't think those are challenges that are going to keep
young households permanently out of the housing market, but it may keep their homeownership rate near historic lows for likely the indefinite future,» Ralph McLaughlin, Trulia's chief economist, told the Wall Street Journal.
Judged at the median,
young households without student debt have indeed experienced declining debt burdens since 2007.
This is very consistent with the large declines in homeownership among
younger households since 2005 (Emmons and Noeth, 2014).
By education and student debt status, the unweighted counts of
young households are as follows:
But the decline in indebtedness has not been uniform among
young households.
The puzzle of declining total indebtedness in the face of rising student loan debt can be resolved by examining debt burdens among
younger households.
According to the study, «households 45 - 54 actually had lower balances in 2010 than in 2007 — $ 70,000 versus $ 75,000, and
younger households held only $ 35,000 in 2010 compared to $ 44,000 in 2007.
And as the table shows, even early in
these young households» post college lives, the effect of student debt on assets is already becoming apparent.
Furthermore, demographic changes have augmented the number of
younger households, which borrow against future earnings as they begin to establish families and careers, as well as the share of retired households, which spend beyond their current incomes by gradually reducing savings and selling assets.
Indeed, the propensity of
younger households — headed by adults aged 29 to 34 — to take out their first mortgage has been much lower recently than it was 10 years ago, a period well before the most recent run - up in home prices.»
Ironically, the lack of refinance options, combined with rising residential real estate prices, may actually put homeownership even further out of reach for
younger households with student debt.
It would disrupt the plans of
young households who are gathering their financial resources to purchase a home.
And homeownership rates, especially for
younger households, take a hit.
Most
young households have very modest amounts of wealth because it takes time to accumulate assets.
By education and student debt status, the unweighted counts of
young households are as follows:
Section 2 turns to demographics and highlights the greater education and occupational prestige of
young households owing student debt.
The median
young household with debts spends about 18 % of monthly household income to service those debts.
Among
young households headed by a college graduate, those with student debt are more likely than non-student debtors to have outstanding vehicle debt (43 % vs. 27 %), significantly more likely to have credit card debt (60 % vs. 39 %), and just as likely to have housing - related debt (56 %).
Similar wide divergence in the incidence of negative net worth (debts in excess of assets) is apparent among less - educated
young households (47 % versus 8 %).
Judged on the basis of the typical debt - to - income ratio, the decline in household indebtedness among
younger households has not been uniform.
The Survey of Consumer Finances shows that
younger households were reducing their overall indebtedness at a faster clip than older households between 2007 and 2010 (Fry, 2013).
Overall, leverage is higher among
younger households whose heads do not have a bachelor's degree.
Younger households tend to be more highly leveraged than older households, and student debtor households tend to be more leveraged than households that do not owe student debt.5 Among the young and college - educated, student debtor households are nearly twice as leveraged as their counterparts lacking student debt — 67 % vs. 34 %.
About half of
young households owing student debt are headed by a college graduate, while only 35 % of
young households overall are college educated.
Among
young households whose heads lack at least a bachelor's degree, student debtors are more likely than those without student debt to owe on vehicle loans, credit card debt and other types of debt and are just as likely to have a mortgage and other installment debt.
In other words, how many years of income would the typical
young household require to pay off all its debts?
In spite of rising student debt, it has been
younger households who have been in the vanguard of reducing debt in the aftermath of the Great Recession (Fry, 2013).
The puzzle of declining total indebtedness in the face of rising student loan debt can be resolved by examining debt burdens among
younger households.
The only
young households that have experienced a decrease in their debt - to - income ratio since 2007 are those without student debt.
Even as
younger households were outpacing their elders in total debt reduction, however, the outstanding volume of student debt rose over the course of the recession.
The typical or median amount owed on all outstanding student loan balances is about $ 13,000 among
young households with such debt.3 This comports closely with other recent student debt figures.
A 2014 Brookings paper notes that credit scores for
young households without student debt are higher than indebted households — a relatively new phenomenon over the past decade.37 And a 2012 study from Young Invincibles estimated that the typical single student borrower now has a debt - to - income ratio that would prohibit him or her from qualifying for a garden - variety home mortgage.38
«Among the current generation of
young households, those who own homes carry more mortgage debt relative to income than previous generations did at the same age,» the review said.
These numbers also show the importance of parents and guardians setting rules for
young household drivers to help reduce the chances of a Huntsville auto accident.
These numbers also show the importance of parents and guardians establishing rules for
young household drivers to help reduce the chances of a Huntsville auto accident.
He cited foreclosure - related housing exits from older adults and delayed buying from
younger households as the primary causes in the downward trend since the downturn.
It's making it hard for
young households to buy their first house and its even weighing on the credit of older households who are helping their kids pay for school.
Yun said the share of first - time buyers, about 30 percent of the market, is at its lowest level in 30 years despite research showing that 75 percent of
young households want to buy.
But now high - tech and other big growth areas are seeing a high percentage of all - cash buyers, fueled by cash - rich
young households looking to get an edge in hot seller's markets.
One bright spot: pent - up buyer demand by
young households.
NAR urges the Senate to ease condo financing The Supreme Court to will hear a land case - that matters to you And
young households are racing to the suburbs These stories and more on The Voice for Real Estate Hi, I'm Stephen Gasque with the National Association of Realtors.
Currently, renters,
younger households and those living in urban areas are more optimistic about their future financial situation.
I think that's going to be for a well - located and well - designed rental that's in town both for
younger households and empty nest baby boomers.»
«With
younger households that are increasingly entering the market looking for more affordable options, home sizes appear to have peaked for this economic cycle,» said Kermit Baker, chief economist of the AIA, in a statement on the survey.
Multifamily housing will benefit as interest rates move up, attracting immigrant and
young households not ready to move into homeownership.
The growing burden of student loan debt:
Young households are repaying an increasing level of student loan debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with high rents and home prices.
Declining affordability needs to be addressed with policies enacted that ensure creditworthy
young households and minority groups have the opportunity to own a home.
Many rural areas are struggling economically, with
younger households exiting for greener economic pastures in urban and suburban areas.
And even when they don't, boomer buyers typically make much larger down payments than
younger households.