Sure hope everyone is doing well! Enjoying the warm weather? What a busy first quarter. Spent a week on jury duty. Busy family! Shaye finished her freshman year at the U of A. Eden and Caroline are looking at their summer vacation. Hard to believe we are already there!
Tucson’s housing inventory is shrinking. Prices are holding or increasing a little in most areas. Interest rates are still amazing. Most of the appraisals so far this year are coming in where they are suppose to. Short sales seem to be more difficult, but not impossible. Homebuyers are using the web to search for property even more (so don’t forget to go to www.tucsonishome.com). There are 7.2 million more renters now than in 2004, and just 400,000 more homeowners per US Census.
I am working on the annual Service Directory. So if you would like to promote your business for free just give me a call or an e-mail.
How Student Loans Affect Home Prices
The staggering amount of outstanding student debt — nearly $1 trillion owed – is beginning to impede the U.S. economy as a whole, a new report from the New York Federal Reserve suggests, chiefly by robbing the housing market of its richest crop of new buyers: young college graduates.
The statistics in the report are dismaying in themselves. With the number of borrowers approaching 40 million nationally, including more than 40 percent of 25-year-olds, the average balance on their loans has risen to $25,000. About 6.7 million of all student borrowers, or 17 percent, are delinquent on their payments three months or more.
"Delinquent student loan borrowers have a very difficult time accessing credit and the share of those borrowers is greater today than in the past," said Donghoon Lee, a senior economist for the New York Fed and one of the authors of the report.
For the average homeowner, the worst news is that these overleveraged and defaulting young borrowers no longer qualify for other kinds of loans — particularly home loans. In 2005, nearly nine percent of 25- to 30-year-olds with student debt were granted a mortgage. By late last year, that percentage, as an annual rate, was down to just above four percent.
The most precipitous drop was among those who owe $100,000 or more. New mortgages among these more deeply indebted borrowers have declined 10 percentage points, from above 16 percent in 2005 to a little more than 6 percent today.
"These are the people you'd expect to buy big houses," said student loan expert Heather Jarvis. "They owe a lot because they have a lot of education. They have been through professional and graduate schools, but their payments are so significant, they have trouble getting a mortgage. They have mortgage-sized loans already."
For years, economists and student advocates warned that the greater debt load would have an adverse impact on graduates’ borrowing power. Now the statistical evidence is mounting. Last month, a Pew Research Center survey found that the share of millennials who own their homes had fallen from 40 percent to 34 percent during the recession, with a similar decline in residential debt.
Everyone has had a harder time qualifying for a mortgage since credit standards tightened in 2008, of course. And it could be that younger people suddenly prefer renting (or living at home). But by looking at mortgage originations, the New York Fed's report ties college graduates' lack of home ownership more directly to borrowing woes.
The implications for the housing market are serious. The number of first-time homebuyers, more than half of whom are aged 25 to 34, has been shrinking since the recession struck, and young buyers now make up their smallest share of the housing market in more than a decade.
Tucson and Vicinity Residential Re-Sale Statistics
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News, Notes, Upcoming Events…
- The repaving project to improve Broadway between Wilmot Road and Pantano Road should be complete in June.
Did You Know…
- 1 in 10 people live on an island.
- Half of the worlds population is under 25 years of age.
21 E. Mills
Great duplex. Currently tenants have a one year and two year lease. Great income. Great condition. Nice kitchens etc...
1125 E. Elm
Fabulous historic 1926 home with beautiful wood floors, remodeled kitchen and more. Plus a duplex in the back.
If you are looking for a roofer, check your 2012 Service Directory.
If you don't have one, please call me!
(This Newsletter is for information only and is not an attempt to solicit other Broker's listings.)