JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

In Texas, the average debt is $26,292 and 56 percent of residents hold student loan debt. But one company found a way to make it go away faster.

In 1995, about a quarter of adults aged 20-29 had student loan debt. In 2016, it had increased to 47 percent. The percentage who had less than $10,000 went from 16 to 12 percent, while those owing $10,000 to $24,999 rose from 8 percent to 15 percent. Former students owing $25,000 to $49,999 also jumped from two percent to 12 percent and those owing over $50,000 from one percent to eight.

We also know that it takes the average college-educated person with student loan debt until around age 35 to reach the homeownership rates of their peers without debt. Student loan debt is one of the biggest reasons the Millennial generation took so long to purchase a home. And what about Generation Z, whose oldest have just drank their first legal beer while waiting for their even larger student loans to come due?

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(Courtesy The Urban Institute)

A look at student loan and medical debt across the nation reveals that how much debt a person carried boils down to quite a bit — especially when it comes to race. And that debt has become one of the top five barriers to homeownership.

The Urban Institute’s study of debt — specifically, student loans and medical bills — has some illuminating data when it comes to Dallas County. (more…)

recession

Minorities were hit the hardest by the housing crisis, and show lower levels of homeownership today.

The economic recession of 2007-2009 affected most Americans in depressingly real and tangible ways. Two groups of Americans are disproportionately affected, still, by the downturn.

A new study by Apartment List shows that the economic downturn had the greatest impact on homeownership among minorities and young Americans aged 18-45, particularly those in the 35-44 age range.

Analysts at Apartment List, an apartment location website, looked at Census data and reported U.S. homeownership rates in general have fallen steadily, recently dropping to their lowest levels since 1965.

In Dallas, the homeownership rate fell from 60.9 percent to 58.7 percent from 2007-2016. The drops were biggest among African Americans, where homeownership fell by 6.1 percent.

“African Americans were highly affected [by the recession], said said Andrew Woo, director of data science and growth at Apartment List. “In Dallas, it is a large drop [in homeownership], larger than the nation average, which is 5.3 percent. What we notice is that it’s very much tied to employment and socioeconomic trends.”

During this same time period, rents increased by 4.2 percent in Dallas, even as owner costs (mortgage, maintenance, etc.) fell by 11.8 percent. So the people least able to afford it were paying more (in rent), less able to save toward a down payment, and therefore less likely to buy a home.

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More often, home is where the degree is

More often, home is where the degree is.

Long ago I was told that it’s more lucrative to be paid to think than to do. Turns out that piece of advice is true on many levels that intersect with homeownership.

Several years ago, the Federal Reserve Bank of New York released data that seemed to say that student loan debt was dragging down homeownership rates among younger buyers. It’s a belief that persists.

At first blush, it makes sense.  If you have more debt, you have less to spend on housing because your debt-to-earnings ratio was weakened.  However, new research is blowing a hole in that homily. It seems that when corrected for education, it’s not debt that’s holding back homeownership rates, it’s education itself.

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Real Estate Story

Everything’s bigger in Texas, including our ability to build wealth.

That’s according to a new study by Bankrate that surveyed the the 18 largest metro areas in the U.S. according to how strong of an environment they provide for making and saving money. Houston ranked No. 1, and Dallas ranked No. 6.

The rankings were created after consulting with experts on which factors should be considered in a conversation about wealth. Here’s what the experts told them were the biggest contributors:

  • After-tax, savable income: This is what’s left over after taxes and necessary expenses. It’s what you could sock away in an interest-bearing account.
  • The job market: Can workers find jobs at competitive wages?
  • Human capital: Can residents find educational opportunities to help advance their careers and earn more money later?
  • Access to financial services: Do people have access to financial products that allow them to invest, save and borrow efficiently?
  • The local housing market: For better or for worse, homeownership is a key way Americans build wealth. If a local housing market is struggling, it can be harder for prospective homebuyers to get a mortgage and for homeowners to accumulate equity.

Other factors considered included participation rates for retirement plans like 401(k)s, a major wealth-building tool for middle-class households. As they noted, “whether or not an employer offers one has a lot to do with the city, both in terms of culture (whether employers think it’s the right thing to do) and supply and demand.”

“If you’re in an area where the unemployment rate is very low, then the employers have to compete for you, and part of how employers compete for you is they offer benefits and they offer retirement plans,” Christian Weller, an economist at the University of Massachusetts Boston, told Bankrate. “Employers do compete on a regional level, on a city level, for talent.”

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Homeownership

Talk about an eye-opener. This story from the Atlantic’s Jordan Weissman takes a look at a recent study from the U.S. Department of Education analyzing where a group of 27-year-olds are today.

The study found that today’s 27 year olds are educated, in debt, and living with their parents. To us, the most interesting finding was that of all the respondents to the survey, the group that attained an associate’s degree had a higher rate of homeownership than those with bachelor’s degrees or higher. About 22 percent of respondents live with their parents, of which 18 percent are bachelor’s degree holders.

It seemed that the high level of debt, both credit card and student loan debt, presented a significant barrier to homeownership, with 60 percent of respondents borrowing money for college, and 79 percent of 27-year-olds owing some money, with 55  percent at least $10,000 in debt on credit cards or mortgages.

So, how old is too old to live at home? And are you surprised that so many 20-somethings still live with their parents?