Fed hike will co$t consumer$

It's a trap

Fed hike will cost consumers $1.6 billion in credit card interest

#realestate #cashbuyerslists #interestrates #carloans #creditcard #schoolloan #mortgages #studentloans #credit #card #debt #billion #million

For the 157 million Americans who carry a balance on their credit cards, Wednesday's Fed action is bad news.

With credit card debt rising steadily, the quarter-percentage-point increase in the federal funds rate will cost consumers roughly $1.6 billion in extra finance charges in 2017, according to...

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STUDENT DEBT AND AFFORDABILITY CREATE RIFT BETWEEN HOMEOWNERS AND RENTERS

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​​​​​​​​​​Despite lackluster economic growth and stark home-price appreciation in several parts of the country in recent months, roughly three-quarters of surveyed households still believe now is a good time to buy a home, but there's a considerable gap in morale between homeowners and renters, according to the latest installment of the National Association of REALTORS(R) Housing Opportunities and Market Experience (HOME) survey. The survey also found that roughly half of young adults with student debt are uncomfortable about taking on a mortgage.

In NAR's second quarter HOME consumer survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations, including questions on if carrying student debt is tempering their ability and appetite to take on mortgage debt.

Through the first half of the year, NAR's survey found that the share of homeowners and renters who believe now is a good time to buy a home is mostly holding steady, with 80 percent of homeowners (82 percent in March) and 62 percent of renters (unchanged from last quarter) saying it's a good time to buy. However, the share of renters who think so is down from 68 percent in December 2015, and those under 35 were the least confident that now is a good time to buy.

Lawrence Yun, NAR chief economist, says the survey brings to focus the ongoing disparity in buyer confidence between current homeowners and renters. "Existing-home prices surpassed their all-time peak this spring and have climbed on average over 5 percent nationally through the first five months of the year and even faster in areas with severe supply shortages," he said. "Most homeowners appear to realize that if they're ready to sell, they'll likely find a buyer rather quickly and be able to use the sizeable equity they've accumulated in recent years towards their next home purchase. Meanwhile, renters interested in buying continue to face minimal choices, strong competition and home prices growing faster than their incomes."

Adds Yun, "Given these affordability pressures, it's no surprise respondents earning over $100,000 and those living in the Midwest - the most affordable region of the country - are the most optimistic about buying right now."

This quarter's HOME survey also revealed that carrying student debt is causing many to be uneasy about taking on additional debt. According to the survey, roughly two-thirds of non-homeowners and half of respondents under 35 with student debt said they aren't comfortable also having a mortgage. Furthermore, of those with student debt, non-homeowners and younger adults were less likely to believe they'd be able to qualify for a mortgage if they applied.

"It's becoming very evident from this survey and our research released last month that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers," adds Yun. "At a time of quickly rising rents, mortgage rates at all-time lows and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market and are ultimately missing out on the stability and wealth accumulation that owning a home can provide."

Mostly unchanged attitudes about direction of U.S. economy, personal financial outlook
A tick under half of all households in the survey believe the economy is improving (49 percent), which is mostly unchanged since the inaugural HOME survey in December 2015. Renters, respondents living in urban areas, and those in the West were the most optimistic. On the other hand, nearly two-thirds of those living in rural areas don't believe the economy is improving.

Reflecting somewhat lessening confidence that respondents' financial situation will be better in six months, the HOME survey's monthly Personal Financial Outlook Index of all households slightly decreased (to 57.7 in June) since March (58.1), but is unchanged from June 2015.

Expanding belief that now is a good time to sell
With strong price growth prevalent in most of the country and homes selling at a quickened pace, more current homeowners (61 percent) believe it is a good time to sell compared to the first quarter of this year (56 percent). Respondents in the West were once again the most likely to think now is a good time to sell, while also being the least likely to think now is a good time to buy.

"More homeowners acknowledging this pent-up demand may perhaps mean we begin to see more supply come online in the near future," adds Yun. 

When asked about their outlook for home prices in their community in the next six months, almost all believe that prices will stay the same or rise (93 percent), which is consistent with last quarter (91 percent). Respondents from the West, those living in urban areas and renters are most likely to believe prices will go up in their communities.

For more information, visit www.realtor.org.

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​STUDENT LOAN DEBT A HURDLE TO HOMEOWNERSHIP

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​​The U.S. currently has a student debt load of $1.3 trillion, which accounts for 10 percent of all outstanding debt. The magnitude of the debt continues to grow in size and share of the overall debt in the economy. While this amount of debt has risen, the homeownership rate has fallen, and fallen more steeply among younger generations. To evaluate those trends, the National Association of REALTORS(R) (NAR) teamed up with American Student Assistance(R)'s (ASA's) SALT(R) consumer literacy program to conduct a survey of student loan borrowers who are current in repayment. The results are available in a new report entitled Student Loan Debt and Housing Report 2016: When Debt Holds You Back. Notably, only 55 percent of student loan borrowers are current in repayment.

Among non-homeowners, 71 percent cite student loan debt as the factor delaying them from buying a home. This is most frequently the case due to the fact that borrowers cannot save for a down payment because of their student debt. Sixty-nine percent of those who are delayed don't feel financially secure enough and 63 percent can't qualify for a mortgage due to debt-to-income ratios. Millennials are more likely to have difficulty saving for a down payment, and Gen Xers and baby boomers are more likely to have high debt-to-income ratios. For older millennials, 79 percent believe their student loan debt is delaying them from buying a home.

Among homeowners, 31 percent say student debt is impacting their ability to sell an existing home and move to a different home. These homeowners face a variety of problems: 18 percent believe it is too expensive to move and upgrade to a new home; 7 percent have problems with their credit caused by student loan debt; and 6 percent are underwater on their home.

The delay in buying a home among non-homeowners and homeowners is five years. One in five expect to be delayed three to five years. Those with higher amounts of student loan debt and those with lower incomes expect to be delayed longer from purchasing a home than those with higher incomes and lower amounts of debt.

Forty-two percent were delayed moving out of their family member's home after college, regardless of whether they were buying a home. This delay has a financial impact on both parents and the student loan borrower. Twenty-two percent were delayed by at least two years in moving out of a family member's home after college due to their student loans. While 18 percent are currently homeowners, 17 percent live with friends or family and do not currently pay rent. Forty-six percent of younger millennials live with family (both those paying and not paying rent) compared to just 25 percent of Gen Xers.

Among survey respondents, most are employed. Seventy-one percent are employed full-time, 14 percent are employed part-time and seeking full-time employment, and 10 percent are seeking employment. Sixty-seven percent received their loans from a four-year college, 31 percent from a two-year college, 27 percent from graduate/post-graduate school, and 11 percent from a technical college.

According to the National Association of REALTORS(R) Profile of Home Buyers and Sellers, among recent homebuyers, one-quarter have student loan debt and the typical amount is $25,000. The share of those with student loan debt rises to 41 percent among first-time homebuyers. Even among successful homebuyers, this amount of debt is cited as a difficulty in the home-buying process.

To find the full report, go to www.realtor.org/reports/student-loan-debt-and-housing-report.

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