Luna wants to buy a home in up-and-coming northeast Los
Angeles before itís too late.
31, she has a masterís degree and earns more than
$70,000 as a court reporter and freelance editor. She
daydreams about trading the Glendale, Calif., apartment
she shares for a little condo, maybe in Echo Park or
one thing holds her back: The $700 sheís paid every
month since 2008, after she graduated from the
University of Southern California ó with $75,000 in
student debt. With about half that total left to pay,
buying that condo seems a long way off.
I donít know if itíll ever happen," she said.
"Barring some sort of awesome miracle, a down
payment is hard to wrap my head around right now."
the many factors holding back young home buyers ó
rising prices, tougher lending standards, a still-shaky
job market ó none looms larger than the recent
explosion of college debt.
amount owed on student loans has tripled in a decade, to
nearly $1.1 trillion, according to the Federal Reserve
Bank of New York. People in their 20s and 30s ó often
the best-educated and highest-earning among them ó owe
most of that tab. That is keeping a crucial segment of
home buyers on the sidelines, deferring one of the
traditional markers of adult success.
National Association of Realtors recently identified
student debt as a key factor in soft demand for
home-buying this spring. A recent study by the trade
group identified student loans as the top reason many
home buyers delayed their purchase. Many more didnít
buy at all.
show todayís adults value homeownership just as much
as their parents did. But the shaky job market, higher
debt loads, and the roller-coaster market of recent
years is keeping many from pulling the trigger, said
Selma Hepp, senior economist with the California
Association of Realtors.
just postponing," she said. "Itís the
economy and the recession and what that generation has
share of buyers who are first-timers has dropped well
below historical averages ó 28 percent of California
buyers last year, compared with 38 percent typically,
according to CAR surveys. The absence of a new
generation of customers could become a long-term problem
for the industry, said Dustin Hobbs, spokesman for the
California Mortgage Bankers Association.
have to have that swath of first-time buyers who will
eventually be your move-up buyers," he said.
"When you take that out, it damages the whole
student borrowers were more likely than most people to
buy a house, experts say, because college graduates tend
to earn more. But thatís flipped since 2008, according
to researchers at the New York Fed. Today, the share of
30-year-old homeowners who have student debt is lower
than that of 30-year-old homeowners without it.
a sign that skilled, educated workers are getting pushed
out of the housing market.
people have less money to commit to housing, they donít
buy a house," Hobbs said.
Stewart Samilin sees that all the time. Heís an agent
at Rodeo Realty in Beverly Hills, Calif., and runs a tax
preparation business on the side. Many of his younger
clients are skipping the house until they pay down their
maxed out on student loans, and thereís nothing else
they want to think about until they pay that down,"
who do start shopping quickly realize they canít
afford as much house as their income suggests. The more
they pay each month on student loans, the less the bank
will lend them to buy a house, said Natalie Lohrenz,
director of counseling at Consumer Credit Counseling
Services of Orange County, Calif. In a pricey market
such as Southern California, that can severely limit a
have to think about your quality of life after you
purchase this home," she said. "Itís OK to
rent for a while."
STORY CAN END HERE)
not to say some people donít make it work.
Manansala is starting to shop for a house, maybe a
two-bedroom in Long Beach, Calif., or on Los Angelesí
Eastside, close to a freeway. When he began to think
about it, the 28-year-old got preapproved for a loan ó
but only for $180,000.
gets you a shack," he said. "I asked, ĎHow
do I get more?í They said I need to pay down
he started aggressively paying off his car, and heís
worked his student loan balance down to $6,000, from
$10,000. With a good job as a creative director for a
Venice marketing agency, he has cut his spending to save
up for a down payment. Heís getting close.
have a goal of buying something by June," Manansala
said. "Iím gearing up for it."
many others, like Luna, are forced to take a much longer
graduated into the worst job market in decades. Although
she eventually found work that enabled her to keep up
with loan payments, itís been hard to save much. In
six years, sheís paid down nearly half of her original
tab. When she borrowed the money for a masterís in
professional writing, Luna acknowledges, she was an
"idealistic" 22-year-old, and the numbers didnít
the reality of a $700-a-month student loan payment makes
it hard to get ahead, house or no house, even with a
good salary. And sheís worried sheíll get priced out
of the city she loves.
frustrating," she said. "I think by the time I
get a chance to get together that money and find a
house, itíll be unattainable."