8 Ways Student Loan Debt Hampers the Housing Market

Many people who are considering filing Las Vegas bankruptcy have significant student loan debts. Often discharging these loans is an uphill slog, but there are benefits to bankruptcy, and talking to an experienced Las Vegas bankruptcy lawyer can help debtors know their options. Growing student debts, though, are having substantial consequences on the U.S. economy. In fact, the Los Angeles Times real estate section ran an article on the impact of student loan debt on the housing market. It isn’t pretty. Here are eight examples:

  1. First-time home-buyers are particularly impaired. Typically, 40 percent of re-sales go to first-time buyers. In May 2012, that figure was at 34 percent, but in April and May 2013, it was 29 percent and 28 percent, respectively.
  2. When demand at the entry level to the housing market falls, it causes a ripple effect up the chain to more expensive homes. People who are already at the bottom can’t sell their homes and move into larger homes, which they may need if their families are growing.
  3. Similarly, older Americans who are ready to downsize can expect to face lower prices, which reduces the equity “payout” they intend to live on.
  4. Underwater homeowners who wish to short-sell their homes will also have a harder time finding buyers and will likely sell for less, which means they may have a higher mortgage deficiency to deal with.
  5. According to a study from One Wisconsin Institute, at all income levels, people who have student loan debts are less likely to be homeowners than their peers, 36 percent less total.
  6. Student debtors are also increasingly defaulting on their loans, which reduces their creditworthiness. It doesn’t help them that lenders have tightened their underwriting standards.
  7. Other factors are premium hikes on Federal Housing Administration loans that make them more expensive than private sector mortgages, underwater homeowners’ unwillingness to take a loss on their homes, and private investors buying homes with cash up front.
  8. Young Americans also suffer from high underemployment and low incomes.

Link to the article here.

The macro-level problems caused by student loan debt are going to persist for a while, but if you are having financial difficulties, talking to a Las Vegas bankruptcy lawyer can help.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.