According to a new survey published by the nonprofit organization NeighborWorks America, student loan debt is the main obstacle standing in the way of homeownership for many prospective buyers. While other research has concluded that student debt is not a factor in the slow recovery of the housing market, this study questions that assumption. Learn more about student debt and home ownership in this week’s blog.
Study Shows Student Debt is Slowing Housing Market
Consumers are under-educated
The NeighborWorks study discovered that roughly 40% of respondents were not aware of down payment assistance programs and many were misinformed about home buying information such as how long a borrower must wait to purchase a home again after experiencing a foreclosure. This gap in knowledge is preventing many otherwise qualified applicants from pursuing home ownership.
Prospective buyers overestimate repair costs
The study also found that consumer overestimated annual home maintenance and repair costs by a factor of 3. The average yearly cost ranges between $2000-$6000 but the average survey respondent guessed that number was closer to $15,000. This overestimation may represent a significant hurdle for younger home buyers who believe that they will not be able to afford ongoing maintenance costs. This may also deter home buyers by making them believe that owning a home will require ongoing work when in reality this may not be the case.
Consumers need to take advantage of available resources
The report noted the importance of providing prospective buyers with more home buying education, such as housing counseling, so that they may gain a more realistic view of the challenges associated with home ownership. There are many resources available, particularly to first-time home buyers, to help them navigate the home buying process and which offer incentives such as closing cost assistance and exemption from Private Mortgage Insurance. The more consumers who are properly educated on the resources available to them, the quicker our housing market will make a comeback.
Title Services from Colony Title Associates
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Tags: housing market