Tuesday, July 19, 2011

Homeownership no longer an aspirational goal: PIMCO

This new trend in demographics will impact years to come.
The idea of homeownership as an aspirational goal may no longer carry much weight as college graduates enter the work force saddled with high student loan debt and older Americans focus on retirement.
Rod Dubitsky, an analyst with PIMCO, said the overall question that looms large over the mortgage industry is: Who is going to buy housing in the next 10 years?
 The a key reason besides jobs...student debt.
And student debts are expected to go even higher, as salaries are dropping, according to Dubitsky. The average median salary for recent graduates fell to $27,000 in 2010, compared to $30,000 in 2007.
Dubitsky said the ability of these borrowers to make their way into the housing market is contingent on whether they have the opportunity to save money. But the statistics on this point remain grim with the average student debt now equal to a 15% down payment on a median-priced home
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