Monday, July 23, 2012

July column for Builder & Developer magazine now online

My column for the July issue of Builder & Developer magazine is now posted online.

For this issue, entitled "The Student Loan Crisis," I wanted to review the important trend of escalating student loan debt and just what that means for the housing market.

An excerpt:

According to a recent analysis of government data by the NAHB, the rise in student loan debt is actually a function of lower home values:  with U.S. household wealth falling by 40% between 2007 and 2010, students who were formerly able to rely on their parents’ home equity lines instead took on a patchwork of student loans from both the federal government and private lenders such as SallieMae (the former GSE fully privatized in 2004), Citibank or JPMorganChase.


Since the year 2000, student loan debt has reportedly quadrupled.  Not surprisingly, a challenging job market for recent graduates has meant a rise in 90+ day delinquency rates for student loans to 8.69% during the first quarter of 2012 (versus 6.67% for home mortgages and 4.55% for auto loans).  Even with a 42% jump in student loan delinquency rates from the third quarter of 2008, the NAHB report concludes that while the total number of distressed loans is likely to continue rising in the short run, it certainly doesn’t rise to the hue and cry of ‘a new economic bubble waiting to burst.’

To read the entire column, click here.

To read the entire July 2012 issue in digital format, click here.

2 comments:

Anonymous said...

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Glendale real estate AZ said...

The rise in student loan debt is certainly a cause for concern, but may not be a significant a drag on young home buyers since the typical borrower has not seen a significant jump in the amount of debt incurred and seems to have a manageable monthly payment.