A more-detailed investigation into comparing student debt and homeownership among young people. If you don’t have a lot of extra debt, the student-loan payment – which would be like having an extra car payment – wouldn’t prevent you from qualifying.
http://www.nytimes.com/2014/07/06/realestate/college-debt-and-home-buying.html?_r=0
An excerpt:
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. Mr. Dyer predicts that mortgage lenders will gradually ease credit standards over the next five years to open up the “buy box” to more young adults.
But what and when they will buy will likely be different from the choices of generations past. “This generation has what some would label a fear of debt,” he said. “They try to be very conscious and pragmatic about what they buy and how much they agree to borrow.”
This has nothing to do with your latest entry here but I was wondering what your opinion is about the 3473 Avocado Vista Lane, Fallbrook sale in 2009 and whether this could have been a straw-buy as some are suggesting?
The following links have some interesting information about the realtor in this sale and the property in general:
http://rickgbaker.blogspot.com/2014/05/listing-history-for-joeys-house.html
and
http://rickgbaker.blogspot.com/2014/05/kristian-peter-sold-joey-fallbrook-house.html
Why the sudden price drop after just a couple of days after the sale?
I don’t know anything about this particular case, but it was during an era of rampant short-sale and REO fraud and those involved got away scot-free. Even though the listing histories seem to present clear-cut evidence, the authorities will do nothing.
Thank you! It is hard to understand that this kind of scam went on for quiet a while and that most people walked away from it like you mentioned. Since this case is still unsolved I figured I would ask your opinion since some people seem to suspect it might have to do with some real estate dealings they were involved in potentially.
There wasn’t any reason for those involved in this real estate deal to think there was any threat of being caught. It was just one of hundreds or thousands done without any recourse whatsoever. Why would anyone involved with a shady sale be killing people over it?
A shady-looking real estate deal in that era isn’t enough evidence to implicate a murderer. They were a dime a dozen.
Mr. Dyer predicts that mortgage lenders will gradually ease credit standards over the next five years to open up the “buy box” to more young adults.
Ah, yes, that oft-rumored but never sighted “recovery”.
tj how ya been?
“gradually ease credit standards”
This oft-rumored fix sounds great but nobody goes into specifics.
Are Fannie and Freddie going to tell lenders to ease the existing standards? No way, nobody is going out on that limb.
The logical thing to do? Take higher ratios with compensating factors – it’s a fair trade.
If the buyer has long-term steady employment, good down payment, ability to carry the load, and decent credit score, then they should be considered for slightly higher ratios. The thought of 50% on the back end is probably out of the question, but how about high-40s?
I actually do think the strawbuyer scam would be worth murder if they were threatening the whole house of cards. Especially since realtors, appraisers and strawbuyers could skim millions off flailing disorganized banks. It would be interesting to run a more detailed mls history to see if the house was actually listed late january of 2010 a week before they went missing. I saw that posting also and have been reading on the fbi site how it operates. A realtor just got 90 years for doing exactly that. It basically involved racking up big fees, setting up a strawbuyer, rehabbing, and then selling for another profit. Perhaps the victim was intending on turning in the operation. Some strawbuyers were not necessarily knowing participants.