Welcome To The New "Short Sale" (Our Latest Depreciating Market): STUDENT LOANS
Yep, the default rate of student loans is the highest it's been since 1997. I have had 2 clients that wanted to buy their first condo, declined due to student loan issues. One of them told me most of their friends were planning to default or were already in default because they've graduated college with no job openings in the the field or industry of their major or degree.
Straight up, borrowers are struggling in today's economy-I get that. I see more 20 & 30 somethings still living at home with mom & dad than ever before. I have more clients buying homes with mom & dad's help than ever before. The biggest impact of default is on students who face damaged credit ratings, which for us Realtors; well, we'll see a generation of challenging first time buyers I think. I also see many younger folks leaving California, creating a trend of Baby-boomers leaving soon after to reside closer to the grandchildren. I sell more homes for people leaving CA than relocating within CA.
I have a client that has a degree in finance and he's working as a waiter at a local pub, because he can't find a job and I feel for him because he's doiing whatever it takes to survive while he finds what he graduated to do. I do know the job market is tough, I'm in Real Estate, I wake up every day without the promise of a paycheck. But can you imagine the effects on our economy if this student loan default trend continues?
*"Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all."*
Some of these kids are truly trying and struggling to do what ever they can, but others I meet seem to be waiting for something to "fall in their lap". I moved out when I was 16 about to turn 17; finished my senior year of high school living on my own; I couldn't imagine living at home past 18. But I had a full-time job, school and was starting one of many entrepreneurial ventures at that time; I had goals and a "Plan A, Plan-B & Plan-C". I may be an old coot at 39, but when I was growing up, we took jobs that paid as well as we could find and had hopefully had benefits-that's what made them dream jobs, it didn't much, matter to me what it was in the moment. We always knew we'd grow from there.
We are truly living in challenging times, which bring out the true nature of people; good & bad.
*Quote taken from By CATHERINE RAMPELL Published: May 18, 2011 in the New York Times