home ownership

Now would seem like the time to buy a home, but there are some people that aren’t. They are giving two reasons for not buying a home at the moment, most of them younger or first time buyers. The biggest reason was student debt. The second biggest was inability to sell their current home. Both are big hurdles and for some a complete wall around home ownership.

Survey

The Top Two Reasons People Gave For Not Buying A Home Right Now A survey done by the National Association of Realtors and American Student Assistance, SALTTM found that millennials fell into this category. They polled student debt holders who were current in their payments and had varying amounts of debt from college, either public or private. The survey found some interesting things.

Student debt

First, 71% of those polled that were non-homeowners, in other words prospective first time home buyers, felt that their student debt was a key factor in them not buying a home. 31% of those polled who were homeowners currently said that their home buying hurdle is their inability to sell their current home.

Delay home ownership

Of those polled who either haven’t purchased a home yet, or currently owned a home, 52% said that either reason; student debt or inability to sell; would put their plans to buy a home, or sell and buy another home, off for at least 5 years, if not more. 1 in 5 expected those reasons to delay their new purchase at least 3-5 years.

You know who that also impacts?

Their parents. Almost half of the respondents, 46%, lived with mom and/or dad. Some paid rent to their parents, some didn’t. 42% said that their student debt was the reason they moved back in after college and delayed getting their own place since then.

There are ways to work around those two reasons

For those currently in a home they own, trying a different pricing or updating could be the answer. For those first time buyers, there are programs out there that can help with procuring a home loan, despite student debt. There are also programs to help restructure student debt and lower payments.

Talk to your Realtor today about how to get yourself in a home.

If you listen to the “experts” in the media, the housing crisis is well over. But if that’s true, why is home ownership at a new low?

Truth is, while the market is bounding back, there are still millions of Americans who want to be homeowners that can’t. In fact, people who rent make up a larger part of US households than those who own. This is because it’s harder for first time homeowners to buy than it used to be.

Here are the obstacles still in the way:

Income

First, income increases aren’t keeping pace with the rise in housing prices. For instance, in 2014 incomes averaged a 1.2 percent increase. In that same year, the median sales price rose 6.6 percent for new homes and 4.7 percent for existing homes.

The only saving grace was that interest rates were historically low which kept mortgage payments low. That helped some.

Too overpriced or too large

The next problem is that new homes are too overpriced or too large for a lot of buyers. New builds are big homes which cater to wealthier buyers. It would seem that there would be smaller starter homes available, but since the median size home in the US is 1,800 and up to 2,500 square feet. That means starter homes are more expensive.

Think about it, new home builders take a similar amount of time to build a 1,200 square foot home as they do to sell a 1,800 square foot home. Say housing prices are around $72 a square foot in your area (this varies GREATLY depending on where you live), then the builder would make an extra $43,200 to build a bit bigger home.

That is a HUGE difference for their efforts and makes sense why they tend to build bigger homes.

Another issue is foreclosures

Foreclosure is still a pervasive issue. It makes existing homeowners become home renters. There are still about twice as many forfeitures now annually as there were before the crisis. Debts beyond the mortgage are also part of the problem. Beyond credit card debt, which is still substantial, a record number of those first time home buyers are carrying huge student loan debt.

Student loan debt

It isn’t unusual for graduating students to have $50,000 or more in loan debt. Those payments are a mortgage payment of their own.

Credit

Lastly, not having great credit is a problem, as well as paying rents that make it hard to save a big down payment required if you have dinged credit.