Pat Kennedy - Your Washington, DC Real Estate Connection

head_left_image

20-Something Recent Graduates: The Amazing Shrinking Buyer Pool

20-Something Recent Graduates: The Amazing Shrinking Buyer Pool

As my friends' children began to graduate from college and get their first jobs, their parents often asked me to help with another rite of passage - helping the kids buy their first homes.  It was often a cute condo, sometimes a small house. 

At yesterday's seminar, The Future of Homeownership in the United States, there was a panel of experts who talked about what is happening to this particular part of the first time buyer pool.

Today's graduates are often saddled with more student loan debt than than the typical price of a first condo or house.  And they can't depend on getting a job that pays enough for them to make a dent in their student loans.  Many of them can't afford to rent a place of their own, or even buddy up in a group house. 

So instead of getting dream job and their own place to live, they wind up moving into their parents' basements, spending their days lurking around Monster.com and playing computer games in the dark. 

We're all hoping that as the economy picks up, these young ones will be able to launch themselves out of their parent's house, but when they do finally come into the real estate market, they will likely have a very different financial and credit profile than what might be ideal.  And because down payment requirements seem to be increasing, they may well need a little help from the Bank of Mom and Dad (although assuming that their parents can be a major help certainly won't always something to take for granted).

But it does look like this part of the buyer pool may have shrunk pretty dramatically.  With luck, their un or underemployed career status will be temporary, merely delaying their decision to purchase.

 If you are planning a move to or from the Washington, DC area, I can help!  I am licensed in the District of Columbia, Maryland and Virginia.  Email me at Housepat@mac.com, or call 202-549-5167.

SEARCH ALL LISTINGS IN THE DC METRO AREA

Comment balloon 17 commentsPatricia Kennedy • December 15 2012 08:41AM

Comments

We adjust to the wind of real estate change that is, the "sales" are a creative, passionate process to market to the audience that is. Not that was!

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) almost 8 years ago

Hello Pat,  With the cost of college and people not getting jobs right away, it is hard to save money to buy a home.  I hope it gets better for these young people.  I guess I was lucky and paid off my college loan fast when I was young.

Posted by Will Hamm, "Where There's a Will, There's a Way!" (Hamm Homes) almost 8 years ago

Patricia: 

Very good post and so true. Parents need to re-think how to send their childrent to College. Community colleges are very affordable and offer all the pre-reqs. needed. 

Posted by Alan Kirkpatrick, Alan in Austin (Austin Texas Homes) almost 8 years ago

This topic is coming up more and more lately it seems the economy is effecting everyone; hopefully, things will turn around. Have a great weekend.

Posted by Pat Champion, Call the "CHAMPION" for all your real estate needs (Coldwell Banker Camelot Realty) almost 8 years ago

Andrew, well put!

Will, I was lucky to go through on piccolo scholarships. 

Alan, you are right.  I think that relative costs of various colleges has to play a big part in helping a child decide where to apply.  I think there should be more attention paid to choosing majors where there are likely jobs.

And Pat, getting a college education is supposed to help increase earning power, not saddle the graduate with huge debts.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) almost 8 years ago
Hi Pat, I am sure this was eye opening on a number of levels. What I think will also happen is that the numbers of college graduates will decline and many of them will chose other career or employment directions. That will possibly create at least a little balance for the first buyers to be in the market place. The future and all the things that seemed so American are gradually changing. Foreign students are keeping the schools in business while they pay exorbitant salaries to the teaching and administrative staff. Many of these colleges have huge investments and because it is profitable, the students are made to pay more and more. If the American students can't pay, they find foreign students who will.
Posted by William Johnson, Retired Real Estate Professional (Retired) almost 8 years ago

Pat, we certainly keep changing, and yes, we keep adapting. I have heard this for years, kids coming home, unable to pay, etc.

 

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) almost 8 years ago

So different than when I was in school. When I was 18, I could not wait to get out of the house. In fact, I left when I was 15. My niece is in college and at 22 is still living at home.

Posted by Elizabeth Weintraub Sacramento Realtor Top 1%, Put 40 years of experience to work for you (RE/MAX Gold) almost 8 years ago

This is a large problem for a huge part of the population.  Parents are saddled with the kids return and of course the kids do not want to be living with mommy and daddy.  Jobs is the only answer and not the kid that ask "do you want fries with that".

Posted by Chris and Dick Dovorany, Broker/Associate at Premiere Plus Realty ( Homes for Sale in Naples, Bonita Springs and Estero, Florida) almost 8 years ago

Pat,

This is a sobering fact, and I am glad you brought it up.  The combined college debt is staggering.  A

Posted by Ron and Alexandra Seigel, Luxury Real Estate Branding, Marketing & Strategy (Napa Consultants) almost 8 years ago

Pat, this is an insightful post!  I am envious of your location and all the opportunites you have to take advantage with your proximity to our nation's seat of power and all the opportunities they offer to listen, learn, and question! 

My biggest shock in Russia concerned the large number of adult children who lived with their parents.  They were in their 30's and 40's and living in the crowded flat, because they could not afford to live on their own even with a GOOD job!  Hopefully we won't be at that stage in the near future. 

Posted by Bruce Walter (Keller Williams Realty Lafayette/West Lafayette, Indiana) almost 8 years ago

As I recall the goal was the "radical transformation of America."  It appears to me the goal is realized.  And right before our eyes...

Posted by Jay Markanich, Home Inspector - servicing all Northern Virginia (Jay Markanich Real Estate Inspections, LLC) almost 8 years ago

Don't get me started on student loans! I think it is a terrible thing that our young people are saddled with so much debt when they leave college. I have found a lot of these first-time buyers are getting help from their parents. I have had some parents serve as non-occupant co-borrowers on their children's mortgage, and have had many young buyers get gift money from their parents for the down payment. It's a different world... BTW, I like your new picture!

Posted by Rose King, Friendswood / Pearland / Houston Bay Area (David Tracy Real Estate) almost 8 years ago

Like Rose, I see buyers getting "gift" help from parents to buy their first home. At least interest rates are still very low, so if they have a job and can qualify, they should buy now while there are still some low priced homes available. Our inventory is shrinking of those low priced homes.

Posted by Hella Mitschke Rothwell, Hawaii & California Real Estate Broker ((831) 626-4000) almost 8 years ago

Pat

Your post is right on target. The first time buyers market is totally effected by the job market. when the real job market picks up the first time home buyer sales will pick up.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) almost 8 years ago

Pat, this is a sobering fact. Students are saddling themselves with debt to get their education and then that hampers their ability to buy a home. This gorup will buy someday - it just will be later than they hope.

Sharon

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) almost 8 years ago

So true, Pat.  I think there are some major changes coming to the way we live in America as we go through these growing pains.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) almost 8 years ago

Participate