Student Debt Delays First-Time Buyers
First-time buyers are missing in action in housing markets across the country. Traditionally first-timers have accounted for around 40 percent of resale purchases. But in May, according to the National Association of Realtors, they were just 28 percent, down from 29 percent in April and 34 percent a year ago. Big deal? Yes. If predominantly young, first-time purchasers are not entering the homeownership pipeline near their traditional rate, at some point the system begins to choke. Owners of modest-priced starter homes find it more difficult to sell and move up. They in turn can't buy the larger homes they crave, reducing demand for houses in the more expensive categories. A shortage of first-time buyers at the intake level eventually triggers problems all the way up. Where are these previously dependable first-time homebuyers in their late 20s and early 30s? A lot of them are carrying such heavy debts from student loans that they're postponing buying houses.
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