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Student debt blocks homebuyers

By Judy Martel · Bankrate.com
Wednesday, December 14, 2011
Posted: 5 pm ET

More potential first-time homebuyers are living with their parents instead of shopping for a home, further stalling a housing recovery.

Mortgage rates are at record lows and home values have dropped -- significantly in some areas of the country -- since the heights of the housing bubble, yet young people are locked out of the market. A report in Housing Wire suggests that mounting student loan debt plays a big part in the roadblock to homeownership. John Burns Real Estate Consulting estimates that total student loan debt is $865 billion, more than all other outstanding household debt except mortgages.

Burdened by debt and poor job prospects, nearly 6 million people age 25 to 34 live with their parents, a 26-percent increase from 2007, when the economy started its slide. The homeownership rate for adults age 25 to 29 is at its lowest rate in 17 years, according to Burns and U.S. Census data.

Are you still living with your parents due to student debt and low job prospects, or are your adult children living with you?

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6 Comments
terri
December 16, 2011 at 11:15 pm

Steven, mooching off your folks isn't being "financially prudent," it's being an opportunistic slacker. Getting an affordable apartment, with roommate(s) if necessary, and taking care of yourself while paying off your loans would be the fair, responsible thing to do.

You speak of "choosing to live at home." Ask your folks if supporting grown folks was on their life's to-do list. You might be shocked to learn that they had other plans.

ollie
December 16, 2011 at 10:33 am

The exorbitant cost of a higher education in this country is appalling. It may take as long for some people to pay off student loans as it does a home loan! In other countries such as the Netherlands college is free. Of course what some do, like Germany, is to help kids decide early on whether to attend a trade school or college by testing, etc.
By the time most kids graduate from American high schools, because they're given very little direction, they can take years to decide on a career and as a result many fall into jobs or a career they don't like or aren't necessarily suited for!
Add the severity of current economics and it's quite difficult even for those with a Masters degree to obtain a good job in their chosen career.
We have the power to turn that around by getting involved. If your governmental reps don't hear from you they'll continue to do what they've always done, just as we have let them do for far too long. It's power in numbers which we as citizens have in our favor so get out there and be a part of the solution!

t money
December 16, 2011 at 1:49 am

Steven-

Thank you for realizing you need to take care of your current debt obligations (student loans, car, etc) before taking on even more debt, i.e. mortgage. With working in the student loan industry, I can't tell you how many times graduates can't pay back their loans because of other debts, auto/mortage/credit cards that most likely we're obtained after college. Unfortunatly, Financial Illiteracy is one of the biggest plagues on this country.

Steven
December 15, 2011 at 2:35 pm

Interesting article. As im "somewhat" in this situation. Im 23, graduated college this past May, have a well paying FT job, and like my peers have student loan debt. I'm still living at home becuase I have learned from other people's mistakes. I am going to be financially prudent and take care of my debts before I get more into debt. I figure that if I lived at home for two years I can wipe out my student loan debt, car note, and any credit cards that I have outstanding.

So, yes some may live at home becuase they have no other choice. While others, like me, and even some of my collages are choosing to live at home until we get our financial house in order.

Ray
December 15, 2011 at 9:26 am

Yes, part of young folk is as described. However, in general, I believe the current generation have not been taught working/money/independence skills and are too coddled by their parents to move out.