WASHINGTON (May 10, 2016) — on this date, speakers at the 2016 REALTORS® Legislative Meetings & Trade Expo discussed regulatory issues on home ownership and discovered that the reason less and less young adults are buying homes is because their student debt is so high.
The high-profile session discussing the impact student loan debt is having on young households' ability to purchase homes was lead by U.S. Housing and Urban Development Secretary Julián Castro. During his speech, Secretary Castro announced some changes coming soon to ensure housing opportunities for young men and women – many of whom are currently repaying the loans they borrowed to earn a college degree.
Secretary Castro began his address by saying the prescription to the American Dream has always been working hard, saving your money and investing in yourself, often by getting a great education. What has changed in recent times is that the third step – getting a great education – is more expensive than ever.
According to Castro, HUD is committed to working with its partners across the administration and in the housing community to explore additional changes that can help more Americans purchase a home. That's why last November, Federal Housing Administration Principal Deputy Assistant Secretary Ed Golding announced changes to condo rules that would address a lengthy and complex recertification process, owner-occupancy requirements, and limits on the types of property insurance that FHA considers acceptable coverage. Secretary Castro announced that the proposed condo rule has left the HUD building and is at the Office of Management and Budget for review.
"Today's exciting news about the big changes coming to condos are a long-fought win for Realtors®, and we're eager to see it come to fruition," said NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. "Realtors® know that condos are an important option for buyers, especially for first-time buyers looking for affordable options in the marketplace."
Secretary Castro concluded, "Realtors® help make the dream of homeownership for so many Americans a reality, and HUD is committed to partnering with them to ensure that the hard-won progress we're seeing in our housing market continues to grow for many years to come.
The panel participants agreed that in addition to affordability concerns, inventory shortages and lifestyle factors such as marrying later in life and having to repay student loan debt are burdening a segment of creditworthy buyers by making it more difficult to save for a down payment.
Discussing some of the ways the Education Department is working to address student loan debt, Chopra said income-based repayment options and holding student loan servicers more accountable during the repayment process will go a long way to ensuring that relief exists for those burdened by their debt. "We need to make sure the pillars of the American Dream of graduating from college and owning a home go together – and not compete with each other," he said.
Sharing research from the New York Fed, Brown explained just how much student debt has defied the current business cycle of the past 10 years. Non-mortgage debt balances, such as debt from auto loans and credit cards, experienced a period of decline during the immediate aftermath of the Great Recession and have how either flatlined or rebounded slowly in recent years. The exception during this time has been student debt balances, which have ballooned from over $300 billion at the end of 2004 to over $1.2 trillion debt today.
Brown concluded that carrying high balances of student debt is likely leading to a growing share of young student borrowers retreating from the housing market and ultimately having to co-reside with their parents.
"With home prices and rents on the rise, saving for the down payment is a challenge for many would-be buyers," said Lautz. "Unfortunately, among other factors, repaying student debt is delaying a typical individuals' path to homeownership by roughly five years."
The final speaker, Guzman, said that in addition to Congress passing legislation that helps ease borrowers' debt burden, Realtors® can play a big role by working with their young clients at the beginning stages of their housing needs, particularly during the leasing process when renting their first place.
"Realtors® can be a resourceful advocate for their young clients repaying student debt by educating them about their housing options and pointing them to credible resources, such as the Consumer Financial Protection Bureau's information on student debt," added Guzman. "The urge to be a homeowner is not lost among young adults, and we can all can work together early in the process to make sure they're able to buy when they're ready."
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
-Article found at www.realtor.org and edited by Remax SW