John Burns Real Estate Consulting points out the devastating fact that total student loan debt is now greater than all credit card debt combined! Yikes!
Student loans are going to be yet another hurdle for the housing market to overcome. Faced with mounting student loan debt, poor job prospects and stagnant wages, an increasing amount of 25 to 34 year olds (a prized demographic for the housing sector) have moved back in with their parents. Almost 6 million 25 to 34 year olds now live with mom and dad, up 26% from when the recession started in 2007…
The good news is that this pent-up demand will ultimately provide a much needed boost to the housing sector. The bad news is that the boost will be heavily skewed to the rental market as it will take longer than ever for young people to qualify for a mortgage, especially if more and more graduates are hit with credit blemishes from unpaid student debt.
Well, at least it’s bullish for residential real estate investors.
BTW, I think they should change the laws back to the way they used to be not so long ago and make student loans dischargeable during bankruptcy like most other debts (with a lag of 5 to 10 years so people don’t just graduate and immediately declare bankruptcy).