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Recent Graduates Have Saved A Negative 13% Down-Payment On Their First Home
Submitted by Ramsey Su via Acting-Man blog,
I accidentally bumped into a recent report by the Joint Economic Committee of the US Congress entitled The Causes and Consequences of Increasing Student Debt.
A quote:
Two-thirds of recent graduates have student loan debt. Those borrowers had an average balance of $27,200.
Considering the median price of a home in the US is $208,000 according to NAR, the average student debt balance is the equivalent of a 13% down payment. In other words, two-thirds of recent graduates have saved a negative 13% down payment toward their first home. Of course, these are the same people that the bulls are counting on for household formation, population growth, job creation and other equally irrelevant arguments for strong housing demand in the future.
Take a look at the table below and tell me if you are still optimistic. The actual delinquency is much higher if the number of loans not yet due or in forbearance are excluded.
Take a look at some of the "solutions" proposed by the committee. They sound just like the real estate bailouts: cut rates, modify debt, forgive debt, and so forth.
This is the future of real estate. A bailout is needed before these future home owners purchase a home – table by US Congress, joint economic committee, click to enlarge.
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JUBILEE and water-board usurers
Off (and somewhat on) Topic, but too FUBAR'd/SNAFU'd to not mention.
This is Friday afternoon humor compliments of an op/ed piece in the New York Times today, asking whether the capitalistic* United States of America should quit literally centrally planning the mortgage market:
Should the U.S. Get Out of the Mortgage Game?*CronyComradeKapitalism: Sponsored by Warren Buffet, Charlie "Fukk You Taxpayers" Munger, The Squid, JP Morgan, TIMMMAY! etc.
#KeepThe Hon. Jon S. CorzineFree&LivingLarge4everInnocenceProject
Which prison is Corzine in anyway?
How is that news paper still in business is the real question. It's been bleeding to death money wise for ten years and on the fence for twenty. Who would invest in that? Seriously.
It speaks volumes for the power of the Jedi Mind Trick of TPTB (via Bankers, MSM) to dupe parents and youth into overpriced "education".
Conversely, it also speaks volumes for the lack of critical/analytical thinking of these lemmings, who are willing to play "follow-the-herd" -- right over their fiscal cliff. If they can't come up with a better solution, they 'deserve' everything they get.
Life does not owe them a living of a "fair financial deal". The sooner they realize that the Media, Parents and Peers are all letting them down -- the sooner they realize that they are on their own -- the better off they'll be.
Two words describe these kids:
Broke. Dick.
Central planning at its best.
We should pull a Brazil and take it to the streets or have a general strike. Ah, maybe not, "American Idol" is on tonight...
People should pay their bills, and not take out loans they cannot afford to pay back.
Remember: The old adage - just get a drgree, we need basket weavers. You can always get a job with a college degree. Most of these students did not understand the typical salary of soem of the degrees and many schools don't give a damm, the liberal arts (liberal professors) need a job since they don't like mickey Dees.
Remember: The old adage - just get a drgree, we need basket weavers. You can always get a job with a college degree. Most of these students did not understand the typical salary of soem of the degrees and many schools don't give a damm, the liberal arts (liberal professors) need a job since they don't like mickey Dees.
If and only if banks cannot conjure up said loans out of thin air.
pods
... and if, and only if, failed banks fail, and failed bankers are fired ...
The US Government should pay their bills, and not take out loans they cannot afford to pay back.
-fixed
Young kids that study hard and get good grades - they tend to trust authority figures - parents, teachers, etc - all of whom assured them, "Don't worry about the cost. It will pay for itself. I'm so (sorry I didn't / glad I did) go to uni when I was young ..."
20 years ago I saw no sense in signing a blank cheque / open contract with the grabmint on the other side of the contract, but there was still pressure to "go to uni / get a better job". ( I'm actually the guy who should have gone to uni but I dropped out, for unrelated reasons, in my second year. )
These kids today, they're learning about breach of trust the hard way. They're learning to disrespect authority but it's costing them big time. They'll learn to trust themselves ahead of authority figures, that no-one is looking after them even though they only tried to "do what is right". Or if there are enough of them, then they will learn that large numbers get results regardless of what is right. (Isn't that what the baby-boomers supposedly "learnt"? Their education was cheap / free.)
It's okay to blame these kids for not running the numbers but that does not absolve anyone else from their share of the blame. Their parents / teachers are still guilty of neglect. Grabmint and banksters are still guilty of exploitation. The students are amateurs. Everyone else is, comparatively, "an expert". The punishments should be distributed to reflect this.
General Strike? Who told you that?
It's a civil war. 1 - 2 million people ran down any defenses put in place and took it all pretty quickly as well. You should go check out rutube, the russian youtube knock off., it has a lot more interesting stuff than the fluff being allowed on youtube.
They can always sell their nose bling.
What about beer money?
actually, if you consider that house purchasing is usually done by a couple, if both havde average debt, we are talking about negative 26% of house down-payment. Bleak future it seems.
Wouldn't it be -6.5%?
Sellers need to give 13% to their buyers as an "incentive" to unload the house. Add that to the 10% in fees....6% RE commissions, bank fees, insurance, inspection, murdering the hidden termites, legal fees clearing all the title defects and mortgage frauds, ....and oh yeah, don't forgtet the property taxes and maintenance.
Have fun, Kids!
HAHA! FIRST HOME? Are you high? . I've saved -13% to pay back my school loans...
http://goldsilverbitcoin.com
Uh oh, guess I reacted too fast by turning my Son's room into a den? Sounds as if he'll be moving back in.
Futon, FTW!
What say you Dr. Krugman? 113% LTV and the problem is solved!
I should have thought of that myself.
I did a community college for 2 years, then transferred and worked my butt off at a 4 year. Like 30 hours a week job plus 5-6 classes. Because I maintained a 4.0 I had academic scholarships, and about 10k in debt in total
My slacker brother is doing the 5 year collage plan, C+ average, not working, and will have close to $60K.
If he gets a bail out...
Maybe go back to school then?
What the hell. Party on Garth...
If?
Debtors prisons are always an option too. Just ask anybody looking up the barrel of an IRS gun.
Me as well. In fact did it twice. Graduated with a Finance degree and spent 10 years in Finance. Went back to school and got a MIS degree and moved into High tech. never looked back. Although I worked my way through both times. I was lucky that education was cheaper and I didn't incur debt. one of my roommates in college worked one semester and then went back to school the next. Took him 6 years but he got through without debt.
Soon they will be able to enlist and have their debt forgiven for serving as cannon fodder in the middle east deserts.
Or they get their debt forgiven by becoming a FEMA camp guard while they watch you and I become cannon fodder!
Either way, bullish for cannon and cannonball manufacturers.
I got 30 thousand in student debt and I didn't even graduate so I guess I'm not included in this study. I get cheap rent on a nice house though so i got that going for me.
- another 15% increase in monthly payment this week
Allow student loans to be discharged in bankruptcy.
This isn't rocket science.
Definitely not---let's forgive student loans for people but not take away their degrees. Yes, that's fair to all of those who decided that going into debt to be brainwashed by an anti-american, criminal, thug, progressive education system was the right thing to do. Yes, let's forgive the debt of those who have helped to destroy this country by punishing the responsible---GREAT IDEA!
Actually, I think college debt should be forgiven provided the person is willing to give back the credetials and the degree and promise never to make mention that they possess the degree. I am in agreement that most college degrees are worthless and only demonstrate that you are a brainwashed tool, BUT, the fact is most employers favor those with a college degree over those without, thus forcing people to waste their time and energy PAYING to be brainwashed by the most criminal education system in the history of mankind.
So, it is simple---forgive the debt if one is willing to turn back in the degree. And for those of us that have a degree paid for, what do we get if we want to turn ours back in? Hey, it must be fair----why should your debt be forgiven if I have no debt to be forgiven? Get the point? The point is we all have to be responsible for our decisions, and if we are dumb enough to go into debt to be brainwashed by the most corrupt country in the history of mankind, TOUGH SHIT----DEAL WITH IT!
Or maybe we should make the students pay back these "loans" to the actual people who DID destroy this country.
pods
Depends on your perspective of "who" is destroying country. From my perspective, the ignorant sheeple and those calling truth tellers conspiracy theorists are just as guilty as the bankers and corrupt government officials----their ignorance makes them accomplices. Burying your head in the sand and refusing to learn about fiat, bankers, the federal reserve, the military industrial complex, the corrupt government, etc., makes you just as guilty as the actual perpetrators. Why? Because if people would turn off ESPN and Oprah and take just several days to learn about the most important element affecting our lives, FIAT CURRENCY and the criminals behind it, we WOULD NOT HAVE THE PROBLEM WE HAVE. As long as the Federal Reserve can inflate, deflate, and otherwise manipulate and control markets, the problems we have will only get worse. Why should I feel sorry for someone trying to work within the system when the system IS THE PROBLEM?
Forgiving debt, etc., SOLVES NOTHING----only an informed, intelligent population of people can solve our problems, and for those that refuse to learn about fiat and the federal reserves crimes against us, I have NO SYMPATHY. Turn off ESPN, stop thinking it is cool to be a trendy liberal ignorant fool, and stand up for the country. Its that simple, yet, most defend the criminal fiat system and allow the Federal Reserve to continue its looting and pillaging of a once great and proud nation.
In the end, it's better to have all of these ignorant sheeple recent college grads in debt---PERHAPS THEY WILL GET ANGRY ENOUGH ABOUT IT TO TAKE SEVERAL WEEKS TO LEARN ABOUT WHY----the criminal FEDERAL RESERVE, the criminal fiat money syste, AND EQUALLY IMPORTANT, the corrupt government that has grown up around it. End the Federal Reserve is where it has to start, otherwise, why have sympanty for people that "enable" and "perpetuate" the corrupt system?
Not forgiving debt, discharging debt through bankruptcy.
Big difference.
I am with you on the FED, in fact, I would scrap the whole federal government.
pods
ME STRONG! OTHERS WEAK!
U mad bro?
I doubt it. Madness retains a certain romance and proclivity towards creativity. DEAL WITH IT!
Actually, I think college debt should be forgiven provided the person is willing to give back the credetials and the degree and promise never to make mention that they possess the degree. I am in agreement that most college degrees are worthless and only demonstrate that you are a brainwashed tool, BUT, the fact is most employers favor those with a college degree over those without, thus forcing people to waste their time and energy PAYING to be brainwashed by the most criminal education system in the history of mankind. So, it is simple---forgive the debt if one is willing to turn back in the degree.
You realize that virtually all employers (even for the shittiest/lowest paying jobs) do credit and background checks, right? How do you think the kid who's filed for bankruptcy is going to fare against you when you're paying your debt? Quit whining and go conquer the world already.
If they agree to a lobotomy and turn in their degrees, I'm all in.
Otherwise, they'll just rack up more debt and expect another handout.
These are Obama supporters, you know.
Excellent point WSP. I know many won't like this but in that light, my proposed "solution" is, if the dead-beats are to be bailed out, then all graduates who paid for their own education should be re-imbursed. This actually makes sense because these graduates have already proved themselves to be money-wise. Chances are that they would use the re-imbursed money wisely, maybe even create real businesses that create real stuff and create real jobs. It makes a shitload more sense than handing out $85 billion per month to bankers who do ????
Bill Clinton tightened the screws on student loan discharge and Joe Biden finished the suckers off with his Bankruptcy bill in 2007, he fronted for the credit card scammers while a Senator.
But you make a valid point, the banksters on the Upper Eastside of Manhattan got TRILLIONS, perhaps SEVEN TRILLION taxpayer dollars. Most of these students were just doing what SOCIETY said to do, and why should their LIVES be ruined, forever? A dear friend of mine's son did what everybody says you should do and got loans and went to college to study engineering. Upon graduation he found that the firms were hiring Indians and other Asians for those engineering jobs. His father had been IT who was kicked out after he trained his Indian replacement. So since all the "favorites" of the regime have been getting "goodies" from We, the Suckers, why shouldn't some of our own get it? For goodness' sake.
SCREW THE BANKSTERS and their PUPPET in the Black House.
Thanks for sharing Laddie. And let that be a lesson to anyone else who has to train up a replacement!!!
P.S. If you "train" them "right", you can charge big bucks to come back as a "consultant" to fix all their fuck-ups. Think harder!
I just love posts like this that expose the real future of Housing in the USA. Of course we know about record low interest rates and investors entering the market seeking deals on foreclosed homes.
At the end of the day, a market like housing is only as good as the customer base. The fake mortgages can get around this for a while, like pre 2008, but in the end that market signal is false.
So, in a world where housing needs the young people in their 20's- to early 30's to be entering in large numbers, the fact that good jobs are scare for this group and their college debt burden in massive, this precludes many from being active buyers, let alone involved in bidding wars that jack prices up.
In your average house markets, out side luxury homes, it is this group of young people that MUST be the buyers. Older folks seek to downsize, it is the young who seek bigger homes to start a family in. I know SO many college grads in the 24-30 range who are still living like teenagers. Taking any old job they can land, and either not marrying, or if they are, putting off family while they try and sort out their low wages versus their high student loan portfolio. At an age when they should be saving for a downpayment, all that spare money each month goes to service student debt. How do young folks pay back 25K in student debt and save 25K minimum for a down payment. Not every one enters the professions, that is a minority. Even those who pick up a decent job, are now in the global labor force, and business is under little obligation to pay high wages.
Here in lies the problem, where does the pool of new buyers come from? The upper 10% is buying and going upmarket. Look at New York and LA real estate, the upper end is heading back up based on the great wealth transfer via the Fed policies of the last 4-5 years. But the major bulk of buyers are trapped in debt slavery and instead of building a downpayment, are slaves to their student debt. Most every young person or young family I know has their student loan payment as a major bill on their monthly list. Money poured into that debt service isn't going to enter the housing market. This is a huge drag on future starter homes sales.
But, the Main Stream media calls the return of housing and the start of a pice spiral upwards to juice America's wealth effect economy. This will be another false dawn. The income growth is not there for the 90%, but the student debt is there.
"Money poured into that debt service isn't going to enter the housing market."
Sure it will. It will flow to some bank, who will then use the money as collateral to take out an interest-free loan from Bennie and the Inkjets, which they will use to buy up all the MBSes that the Fed doesn't want to be seen purchasing... yet! Later, Ben will buy them all at par, saving the entire system.
TADA!
I think that at least a couple brain cells just committed suicide reading this. Ha ha. So sad. The only real flaw here is that I dont think the banks care about using collateral for loans anymore. lol.
+1 JB. Tip of the iceberg too. All the smoke and mirrors lead to false confidence and false hope. To a large degree also most people simply dont want to admit they are fucked... or are so trapped in normalcy bias they can't see the forest for the trees. Tragedy in the making for sure.
The Federal Reserve Est 1913.
'Ruining Lives For A Hundred Years'.
And over here peeps, our right honourable fuckers are now pushing GM crops. Saying that they are great for your fundamental wellbeing, not for the kick backs mind.
The next alien spaceship that comes through here I am on it. This place has gone two steps past insane, I want off this fucking dirty filth infested rock, is everyone bar us lot fucking mental, or are we the fucking mental lot for not agreeing to have your world turned upside down? Fuckers, me head is spinning.
Its all about food. Is the bottom of the pyradmid per se. The only way to keep the "growth" mantra alive is to make sure crops are high yield and resistant to everything. Nevermind that tinkering with millions of years of genetics may have some consequences... and the means to the end for the powerful is to run over the little guy... etc. It's for our own good, don't ya know! lol.
http://www.twitter.com/abbymartin , breaking the set on RT
maybe give a few people that to help push back against all the lies.
But, but, but, but......the Federal Reserve can just print the money up and hand it out to whoever it chooses, so whats the big deal? Just print money already. Look for thousands of years we have falsely lived in artificial scarcity, all the while not realizing that the key to prosperity is to just print. Listen folks, printing money is cheap and great for everyone, right?
So if we just forgive all the debts to our favored political allies, NOT FORGIVE the debts to those with whom we dislike, and then print money like there is no end, BUT, only give that money to those with whom ally with our anti-American, Marxist, progressive ideals, what's the problem? Turn those machines back on, we got some printing to do---full press ahead!
As cougar pointed out so well here at ZH,
"They will print until their eyes bleed"
The question is whether or not they will endlessly and increasingly both pipeline it to the top and suck the rest back in like a black hole. I have a feeling that any sort of hyperinflation will be short and epic, and only after years of being crushed alive.
And as Sam Neil pointed out, as we head into the event horizon, we don't need eyes where we're going
Who knew saving 0% would put you ahead of the game?
I've been telling people for years now, that there's simply no such thing as saving wealth in dollars.
War is peace. Freedom is slavery. Ignorance is strength. Negative is Postive.
Spot on! Sums up our nation and its retarded inhabitants very nicely-----you have been awarded the quote of the week!
Is someone going to point out that a student loan is not a current liability? You don't owe $27k tomorrow. That $27k in student loans, which is probably around $20k for those who didn't go to medical school, is only like a $300 month bill. That's not a negative down payment. You can still have student loans and this thing called "savings".
Next time you accidentally bump into a table, don't post stupid shit.
A DTI of 300% is not unreasonable for a home. But then again, there are not many 24 year olds buying a house. So that average annualized salary for those under 30 means very little.
A 200k mortgage is going to require a payment of roughly 1000 a month. If you've already got a 300 cash drain, you now need $1300 to service both debts instead of just $1000. And that's before factoring in any other expenses or debts. Another way to look at it is that an expense of $300 a month saps up, whatm $10k of pretax annual salary (depending on your bracket and state, of course)?
I actually agree that $300 per month is not, on its face, a ridiculous amount of money to be spending to repay college debt. IF A PERSON HAS A GOOD JOB!!!
These kids are getting sh*t jobs, and there is no prospect of that changing.
Okay, they can often pay the $300 per month, while living free in the parental home and having a sh*t job. However, adding $1,500 per month of mortgage, property taxes, utilities and so on, does not pencil out, when wages are so low and food and other costs keep going up.
There *would* be loads of 24 year olds buying houses, if there were jobs that paid well.
kareinca:
... plus they have to compete, wages wise, against debt-free Indians ...
How much have non-graduates saved for their first home?
They don't care that you have a mortgage, they care that you have the debt that goes along with it. If they've managed to saddle you with debt with no mortgage that's just fine too.
John Taylor Gatto - The Scientific Management of Children
http://www.youtube.com/watch?v=5UadPqGscfI
50 year mortgages coming.
"Buy now, have time to pay it off, do a reverse mortgage when you pay the loan off and retire."
That will be the pitch.
I think I read here on ZH not too long ago that thanks to debt and reduced earnings prospects, by far the the biggest bang for the buck was an AA degree from a community college. You can still claim you have a degree, and the cost is two years at a CC with low to zero debt. While I'm pointing my daughter at a 4-year degree, the local CC has a pretty nice setup with one of the state universities that gets you an AA after two years and a BS at the state school the following two years.
Debt really has to be taken out of the education equation, all it's caused is cost inflation of degrees with no benefits to anyone other than lenders.
Interestingly and ironically...
1. The state with the lowest Debt/Annual_Earnings ratio is California.
2. The states with the lowest Delinquency/Default rates are places like Minnesota, Wisconsin, and some NE states.
3. "Conservative" states don't seem to fare well in either column.
Must admit that these stats are not what I'd expect after reading ZH for over a year. E.g. I'd expect the stats for CA and TX to be reversed. Hmm...
The new immigration bill TRIPLES the LEGAL immigration into the US, so THAT is where the housing boom will come from, when you get, as Census bureau predicted in 1999, about ONE BILLION "AMERICANS" by century's end or sooner then you will NEED housing.
It's a debtor nation, alright. Seems the Blobama admin. has these poor kids by the cajones, via the vice-grip of debt. When will we parents teach our children that credit = debt? Our family does not live beyond our means and we owe nothing to any entity. When our 22 y.o. was being besieged by telephone calls from all types of fine arts colleges, promising student loans for this purpose, my husband got on the phone with one of these clowns and he asked her if these "loans" were recourse or non-recourse. THIS DIPSHIT LADY DIDN'T EVEN KNOW THE DIFFERENCE BETWEEN THE TWO!! A college recruiter who doesn't know the definition of "recourse" or "non-recourse" when attempting to "recruit" students for her admin. JEEZUZ!! The inmates are definitely running the asylum. Thanks, Reagan, for taking us from the biggest creditor nation to the bigest debtor nation. Thanks a fuckload!! And wait 'til Blobama care hits... we ain't seen nothin' yet!
They killed the Goose. Now they shall wait for it to lay the golden eggs.