It’s almost impossible to sell my starter home because the typical first-time homebuyer isn’t buying in the $200,000 price range in my community. With so much college loan and other debt, most first-time buyers can only afford the foreclosures and short sales listed around $100,000 to $150,000. Some of them don’t qualify for a mortgage at all. For those of us with homes in the $175,000 to $225,000 price range in Florida, it’s a waiting game. According to a recent article by The Wall Street Journal, the trends are not looking good. The charts show as students graduate with more student loan debt, their credit scores go down. They take out fewer and fewer mortgages. It may be the millennials who are taking out the student loans, but it’s older millennials and members of Generation X who are stuck in starter homes because of the debt that is preventing younger people from buying.
Becoming the rental generation
Experts say a lot of millennials see no point in buying. According to a piece by Sober Look, people are getting used to the new rent culture. While there has been weakness in the single family housing sector, generation rent is behind the surge in apartment construction. In my community, I’ve noticed several apartment buildings with hundreds of units hitting the rental market soon.
Getting a warped view
I think the younger people who are buying homes may be getting a warped view of what home ownership is really like. Many of the millennials I know are buying foreclosures, which often come with expensive surprises. For example, some of the foreclosures in my area need replacement air-conditioners, new roofs and appliances. A first-time home buyer that opts for a foreclosure can quickly become disillusioned with the highest cost of being a homeowner.
Looking at the big picture
Although lawmakers are trying to make it easier for people to pay back their college loans, they aren’t doing anything about the escalating tuition costs. People are too short sighted to realize that student loan debt is going to affect every aspect of the economy. Without a debt, the student loan “bubble” is harming the economy and especially the housing market. As a parent with two college students, I am horrified by the high cost of college. I encourage them to pay their way through college so they aren’t negatively affected for the rest of their lives. College was supposed to help people achieve their dreams of making higher salaries and buying homes, but it’s actually shutting an entire generation out of the American dream. In many cases, it’s preventing Generation X from moving up as well.
More from this contributor:
I Borrow From Myself Before Tapping Home Equity
Six Figures Isn’t Making Us Rich
First Person: I’m Keeping Up with Inflation, Not the Joneses