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.

Student debt table


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.