How the Student Loan Crisis Drags Down Home Prices

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Image Source | Getty Images

Pity the college graduate, burdened with shocking levels of student-loan debt and looking for a job in the worst employment market in two decades.

But save a little pity for the rest of us.

The staggering amount of outstanding student debt — nearly $1 trillion owed – is beginning to impede the U.S. economy as a whole, a new report from the New York Federal Reserve suggests, chiefly by robbing the housing market of its richest crop of new buyers: young college graduates.

The statistics in the report are dismaying in themselves. With the number of borrowers approaching 40 million nationally, including more than 40 percent of 25-year-olds, the average balance on their loans has risen to $25,000. About 6.7 million of all student borrowers, or 17 percent, are delinquent on their payments three months or more.

“Delinquent student loan borrowers have a very difficult time accessing credit and the share of those borrowers is greater today than in the past,” said Donghoon Lee, a senior economist for the New York Fed and one of the authors of the report.

(Read MoreStudent Debt Climbs as Credit Gets Tighter)

For the average homeowner, the worst news is that these overleveraged and defaulting young borrowers are no longer qualify for other kinds of loans — particularly home loans. In 2005, nearly nine percent of 25- to 30-year-olds with student debt were granted a mortgage. By late last year, that percentage, as an annual rate, was down to just above four percent.

The most precipitous drop was among those who owe $100,000 or more. New mortgages among these more deeply indebted borrowers have declined 10 percentage points, from above 16 percent in 2005 to a little more than 6 percent today.

“These are the people you’d expect to buy big houses,” said student loan expert Heather Jarvis. “They owe a lot because they have a lot of education. They have been through professional and graduate schools, but their payments are so significant, they have trouble getting a mortgage. They have mortgage-sized loans already.”

 

For years, economists and student advocates warned that the greater debt load would have an adverse impact on graduates’ borrowing power. Now the statistical evidence is mounting. Last month, a Pew Research Center survey found that the share of millennials who own their homes had fallen from 40 percent to 34 percent during the recession, with a similar decline in residential debt.

Everyone has had a harder time qualifying for a mortgage since credit standards tightened in 2008, of course. And it could be that younger people suddenly prefer renting (or living at home). But by looking at mortgage originations, the New York Fed’s report ties college graduates’ lack of home ownership more directly to borrowing woes.

The implications for the housing market are serious. The number of first-time homebuyers, more than half of whom are aged 25 to 34, has been shrinking since the recession struck, and young buyers now make up their smallest share of the housing market in more than a decade.

(Read MoreFour Ways to Make Your Tax Refund Pay You Back)

In February, the Consumer Financial Protection Bureau asked private lenders to suggest options for relief of student loan borrowers. “They are increasingly concerned about the effect of student debt on household formation to see if there’s anything they can do to thaw the marketplace,” said Mark Kantrowitz, publisher of the financial aid website Finaid.com.

But existing efforts to prevent delinquency on federally backed loans — such as basing the size of borrowers’ payments on their income — have sometimes made getting a mortgage more difficult. “It confuses the mortgage process,” said Jarvis. “Income-driven programs do help them afford a home and ought to make them more creditworthy, but they have not communicated well.”

The best fix for everyone would be a faster growing economy, which would provide jobs and higher incomes to those who have borrowed. Until then, Jarvis sees the average college grads’ situation as a Catch-22. “If you don’t prioritize your student loan debt you won’t be able to get credit in the future,” she said, “and if you do pay it, you won’t be able to afford anything else.”

Courtesy of your Arcadia Real Estate Agent

4 Reasons to List or Buy a Home in December

 / By Zillow.com / Comments
Home For Sale Real Estate Sign in Front of Beautiful New House.

Tis the season to sell and buy! Here are the top four reasons sellers should list and buyers should purchase prior to ringing in the New Year.

The commitment factor

Buyers searching for homes over the holidays are serious, committed and ready to go, often motivated by a deadline-oriented relocation brought on by a career switch or an unexpected change in housing situation.

Furthermore, with vacation time during the season, local buyers generally have more time during the weekdays to look.

Emotional buying

The holiday season also brings out emotions and feelings of nostalgia in buyers, which may help push their decision making to quickly move forward with the purchase.

When staging homes, sellers and agents should try to make the house feel as holiday-homey as possible. Let the buyers picture themselves there.

How about some tasteful greenery, the gentle glow of twinkly lights, a little golden holiday bling and the scent of baking cookies wafting through your open house?

The low inventory advantage

Inventory of homes for sale is excruciatingly low. Buyers have fewer choices, which means sellers’ homes will be in demand — and greater demand equals more money.

Low inventory isn’t necessarily a bad thing for buyers, especially for those who must make a decision quickly.

However, both buyers and sellers must be realistic about desired purchase and sale pricing.

Tax advantages

Purchasing prior to the end of the year can be advantageous and motivating to buyers for tax reasons.

Closing on a home before the end of the year allows you to deduct property taxes, mortgage interest, and loan points on this year’s tax return.

If you can buy your dream home AND save money, why wouldn’t you?

“4 Reasons to List or Buy a Home in December” was provided by Zillow.com. 

Courtesy of your Arcadia Real Estate Agent

As the sun rises, hundreds gather in Westchester to see Endeavour

L.A. NOW

SOUTHERN CALIFORNIA — THIS JUST IN

As sun rises, hundreds gather in Westchester to see Endeavour

October 12, 2012 |  7:45 am

Crowds at shuttle
Early morning light bathed Endeavour’s weathered body in a pink glow Friday morning as more than 500 people, many from the neighborhood, gathered in a Westchester parking lot to catch a glimpse of the space shuttle on the first leg of its final journey.

A chattering crowd of hundreds converged at the intersection of Sepulveda Boulevard and La Tijera Boulevard. As the sun began to rise, some thrust phones into the air to snap a picture. Others stood on stepladders and folding chairs, hunting for any elevation gain that would give them a better view.

Other crowds spilled into local businesses along Sepulveda Boulevard, including a Coffee Co. facing south toward the shuttle’s parking spot. Owner Gus Kazemi, 56, pulled tables off a raised concrete platform at the entrance to the café, where more than two dozen people leaned over the metal railings toward the shuttle.

“I feel like a part of a larger community, not just the United States,” said Matthew Lucy, 34, who gathered with his wife, Katinka, and daughters Sofia, 6, and Madeleine, 4, inside the Coffee Co. café.

In the parking lot, crews were working to widen the computerized transporters carrying Endeavour so they can travel over medians on Manchester Boulevard.The shuttle will continue east down Manchester, passing into Inglewood city limits at Glasgow Avenue, where it will again stop for several hours for more power line work. There, crews will also move the orbiter onto the dolly system that will tow it over the 405 Freeway beginning about 10 p.m. Friday.As the crowd grew, onlookers stayed quiet and orderly behind the police barricades erected to create a boundary for the shuttle. Officials said the crowd had been orderly all night, but are concerned that as more people arrive during the day, the sizes could get unmanageable.

Sidewalks will remain closed for much of the remaining route, said Los Angeles Fire Department Battalion Chief Michael Bowman.

“We just said, ‘Let’s keep it open, let people enjoy it,’ but we may not have that opportunity again,” Bowman said.

Many people wore hoodies and pajamas. Parents held hands with children wearing school uniforms and backpacks, stopping to see the shuttle on the way to school.

“When else do you get to see something like this in your own backyard?” said Jennie DiPaolo, 49, whose two sons, Luke and Matthew, were wearing red St. Anastasia Catholic School sweat shirts. “We can go see it in the museum, but this is our neighborhood. We drive by here every day.”

– Christine Mai-Duc and Andrew Khouri in Westchester

Photo: Folks gathered on the corner of Westchester Parkway and McConnell Avenue on Friday to see the space shuttle Endeavour leaving LAX for the streets of Westchester. Credit: Lawrence K. Ho / Los Angeles Times.

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Olympic Medal Count 2012: Early Day 5 Standings and Bold End-of-Play Predictions

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Rob Schumacher-USA TODAY

The London Olympics are going strong, and Day 5 looks to continue the fun and excitement.

After the crowing of Michael Phelps’ Olympic record on Tuesday, we turn our heads to some different action.

Medals will be handed out in 11 different sports on Wednesday. From kayaking to weightlifting, athletes will rise to the occasion for their countries or falter and return home without realizing their Olympic dreams.

Most of the medals being earned today are not in the high-profile events, but they add to to the overall medal count all the same.

London Olympics Medal Count as of Aug. 1, 8 a.m. ET.

Olympic Medal Tracker Gold Silver Bronze
China Total: 23 13 6 4
United States Total: 23 9 8 6
Japan Total: 13 1 4 8
France Total: 11 4 3 4
South Korea Total: 8 3 2 3
For full medal results, check out Bleacher Report’s official leaderboard.

 

Quiet Day for Americans

Wednesday won’t be a day filled with medal upon medal for the USA. There are opportunities here and there to snag a few, most notably in the men’s individual all-around gymnastics finals and women’s 4×200-meter freestyle relay, but overall it should be fairly quiet on the American front.

The American contingent will be focused on preliminary action. Misty May-Treanor and Kerri Walsh-Jennings look to continue their Olympic set and match records in beach volleyball, and Team USA attempts to continue their domination in women’s basketball.

Don’t look for a big influx in gold on Wednesday.

Gymnastics Redemption

After a disappointment in the team competition, the men will go their separate ways and look for individual gold. This will be their chance to some sort of redemption after not claiming a medal as a group.

The men are talented and can come away with some individual hardware. Supposedly they have the best talent since the 1984 squad, but they have yet to live up to that potential in London.

It will be interesting to see what their mindset is entering the competition after their previous performances. As much as they were celebrated entering the Games, it is time for the men to step up. Maybe they can be inspired by what the women did on Tuesday.

China Will Extend Gold Lead

With the Americans only having a select few opportunities to close the gap on gold, look for the Chinese to extend their lead.

They already have one gold guaranteed as the gold-medal match in women’s table tennis features Ding Ning and Li Xiaoxia.

Their early grasp on gold may be difficult to overcome, but it’s still early in the Games, and the Americans have plenty of opportunities to close the gap as the days pass. But for today, it looks as if they will extend the lead and continue their firm grasp over the rest of the world.

I hope you enjoyed the article! -

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The Top 5 Things Buyers Love

The Top 5 Things Buyers Love

This week’s blogs are chock-full of ways to translate what buyers love into strategies for selling your home this spring. 
Here are the top five things potential buyers want in a brand-new house, according to a recent survey by trade publisher Hanley Wood:
  • Everything is new
  • Less maintenance
  • More energy-efficient
  • Opportunity to customize
  • Contemporary floor plan

And here are the top five things potential buyers like about existing homes:

  • More affordable
  • Established community
  • Opportunity to remodel
  • Character
  • Better neighborhood

Now you know what to emphasize in your listing, whether you are selling a new house or an existing house.

Image courtesy of Morguefile contributor Taliesin

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FHA’s Mortgage Delinquencies Soar

Closer to a bailout? FHA’s mortgage delinquencies soar

By Tami Luhby @CNNMoney July 9, 2012: 12:38 PM ET

Delinquencies and foreclosures of FHA-backed mortgages are soaring, putting further strain on the housing agency's finances and making a taxpayer bailout more likely.Delinquencies and foreclosures of FHA-backed mortgages are soaring, putting further strain on the housing agency’s finances and making a taxpayer bailout more likely.

NEW YORK (CNNMoney) — The mortgage market appears to finally be stabilizing — as long as you ignore loans backed by the Federal Housing Administration.

Increasingly, FHA-insured loans are falling into foreclosure or serious delinquency, moving in the opposite direction of loans guaranteed by Fannie Mae and Freddie Mac or those held by banks, which are all showing signs of improvement.

And taxpayers could ultimately be on the hook for FHA’s growing number of troubled mortgages. The agency’s finances are already on shaky ground, and additional losses from loans going sour could prompt the need for a federal bailout, experts said.

“We can’t escape this one,” said Joseph Gyourko, a real estate professor at the University of Pennsylvania’s Wharton School. “This is an arm of the U.S. government.”

The share of government-guaranteed loans, a majority of which are backed by FHA, that were 90 days or more delinquent soared nearly 27% during the year ending March 31. Foreclosures jumped nearly 17%, according to a report published recently by federal regulators.

At the same time, bank loans saw a dramatic improvement, with delinquencies shrinking by 39% and foreclosures declining by nearly 10%. Fannie and Freddie’s portfolio also improved as delinquencies dropped by nearly 15% and foreclosures slid by more than 6%, the quarterly report issued by the Office of the Comptroller of the Currency said.

FHA has also had a tougher time successfully modifying loans. More than 48% of government-guaranteed mortgages re-defaulted 12 months after modification, compared to 36.2% of loans overall, the report said.

FHA’s risky borrowers: FHA doesn’t make loans, but it backstops lenders if borrowers stop paying. With this guarantee in place, banks are more likely to offer mortgages to borrowers with lower credit scores or incomes.

FHA-backed loans made up more than 29% of the market for home purchases in the first quarter of 2012, according to Inside Mortgage Finance, an industry publication.

Housing experts have been warning for years that many FHA-insured loans are not sustainable, especially in these troubled times. That’s particularly concerning because FHA’s share of the market has swelled in recent years as lenders pulled back on providing mortgages that weren’t backed by the government.

One of the main critiques of FHA loans is that they require very low downpayments — a minimum of 3.5%. In an environment where home prices are declining, borrowers can quickly slip underwater and owe more than their property is worth.

“These are very risky loans,” said Ed Pinto, resident fellow at the American Enterprise Institute, a conservative think tank. And loans made in the past three years are “moving into the beginning of the peak delinquency period and they are very big books of business.”

Unless the economy improves significantly over the next few years, FHA will experience even more delinquencies, said Guy Cecala, publisher of Inside Mortgage Finance.

Little room for failure: The dramatic jump in delinquencies comes despite the agency’s efforts to improve the quality of the loans it insures.

Over the past several years, soaring defaults have been eating away atFHA’s emergency reserves, which cover losses on the mortgages it insures. In fiscal 2009, the reserve fund dropped to 0.53% of FHA’s insurance guarantees, well below the 2% ratio mandated by Congress. By late last year, it had fallen to 0.24%.

FHA pledged to shore up its standards and its finances in 2009. The agency has since increased its insurance premiumsestablished minimum credit scores for borrowers, required larger downpayments from those with credit scores below 580 and banned sellers from assisting borrowers with the downpayment. It also created an office of risk management and cracked down on lenders with questionable underwriting processes.

Despite the emergency fund’s diminishing reserves, FHA maintains that its efforts are working. The loans insured starting in 2009 are much higher quality and should lower delinquency levels over time, an FHA official said.

“We expect the new books will continue with their better performance, primarily because of the steps that were put in place,” he said. “And we are benefiting from having more high-credit borrowers.”

Still, FHA watchers warn that the agency doesn’t have much of a cushion against these rising delinquencies and foreclosures. And if the losses grow too great, the agency could need a taxpayer-funded bailout.

The FHA says that its reserves should be restored by 2014 barring a second recession, but outside experts aren’t so sure.

“They are doing very badly … there’s no two ways about it,” said Andrew Caplin, a New York University economics professor who has studied the agency. “Over the next five years, there won’t be enough of an economic recovery to fix FHA’s finances. Not a chance.” To top of page

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How the West is winning on home prices: Clear Capital

REAL ESTATE
How the West is winning on home prices: Clear Capital
By Jessica Huseman

• July 10, 2012 • 8:14am

Quarterly home values in June improved nationally, continuing a positive trend from the spring. National prices rebounded with quarterly and yearly gains of 1.7%, according to Clear Capital, which forecast continued growth through the remainder of the year.

National home prices picked up notable momentum over last month’s marginal gains of 0.1%, the Trukee, Calif.-based data and valuation company said. It predicted additional growth of 2.5% forecasted through the end of the year.

“June home price trends provided further evidence that housing has turned the corner, with the momentum of the recovery picking up speed,” said  Alex Villacorta, director of research and analytics at Clear Capital.

Clear Capital uses a rolling quarter measure, which compares the most recent four months to the previous three months. The rolling quarters have no fixed start date and can be used to generate indices as data flows in to reduce multimonth lag time.

The West came in with the highest gains, showing quarter-over-quarter growth of 3.5% — an increase of 0.8% over May and annual price gains of 4.1%. Clear Capital expects the trend to continue through 2012 with an additional 5.75% growth over the next two quarters.

While the recovery generally began in the lower-priced segments, growth spread across all price tiers in the West, which the report calls an “important step in the progression of this recovery.”

In the quarter, low-tier gains in the West hit 3.6% (sales less than $140,000), mid-tier gains reached 3.1% (homes selling between $140,000 and $347,000) and top-tier gains climbed to 3.2%. This led the West to push ahead of the South, the next closest region, by 2%.

The South continued to grow in June, pushing up 1.5% over the rolling quarter, slightly above May’s 1.2% gain.

The Midwest saw the largest increase over last month in quarterly home prices, rising 1.2% compared to May’s quarterly losses of 2%. It was the only region not posting year-over-year gains, with a loss of 0.6%.

Home prices in the Northeast rose 2.3% over the last year. The South experienced a smaller price hike of 1.5% over the last year and during the quarter, an improvement over the annual growth of 0.9% shown in last month’s report.

The top 50 metro markets also posted gains in June, with the large majority of markets seeing quarterly gains and only seven seeing slides. Of those markets that posted losses, only four saw declines larger than 1%.

The report indicates more good news out of Phoenix, which has been showing consistent signs of strength for the past 10 months. Clear Capital reported quarterly growth of 8.7% in Phoenix with annual gains of 20.4%.

Seattle, where prices rose 8.4% over the quarter, could see prices rise 14.4% annually once final numbers of 2012 are in, while Phoenix prices could rise by 10.4% annually.

Atlanta is not positioned to do as well. It sustained the largest declines of all the MSAs. However, the anticipated losses of 3.2% seem mild in comparison to Atlanta’s total declines of 53.5% from peak prices in 2006.

jhuseman@housingwire.com
@JessicaHuseman

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Pasadena Market Report (May 2011 – May 2012)

Pasadena Market Report (May 2012)

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Area Locals Do Well at CIF Track & Field State Meet in Clovis!

HIGH SCHOOLS: South Pasadena’s Kieffer-Wright jumps to state title

By Miguel A. Melendez, SGVN twitter.com/StarNewsPreps
Posted:   06/02/2012 11:27:04 PM PDT

South Pasadena’s Claire Kieffer-Wright wins the high jump at Saturday’s CIF-SS State meet in Clovis. (Scott Varley / Staff Photographer)

CLOVIS – The drought, albeit a short one, is over.

For the first time in two years, South Pasadena High School’s Claire Kieffer-Wright is bringing home a CIF State track and field championship thanks to a gutsy performance in the high jump in front of 7,123 at Buchanan High School.

Kieffer-Wright, a sophomore, made giant strides since narrowly qualifying for the state prelims at the Masters Meet on May 25 as she hit the winning mark of 5 feet, 10 inches. She is the first West Valley state track champion since Sam Pons, now running at Princeton, won the 3,200 meters two years ago for South Pasadena.

In a show of true perseverance, Kieffer-Wright wasn’t deterred despite missing the opening jump of 5-3.

“It was really nerve-wracking missing my first attempt,” she said. “I was a little shaky but I knew I had to compete. That’s the main thing in the high jump besides form and technique, to be able to brush off mistakes and be mentally tough.”

After clearing the winning mark, Kieffer-Wright opted to continue and made an attempt at clearing 6-0 3/4, the qualifying mark for the Olympic trials “B” standard. Kieffer-Wright made two attempts and ended there because of back problems, but the mere fact she had the opportunity to do so showed how much she’s accomplished in just one year.

The East Valley also had a representative sitting atop the podium as Damien’s Jarrett Gonzales won the state title in the 300 hurdles with a mark of 37.30 seconds.

Gonzales made quite a turnaround, from not even reaching the Sierra League finals because of an injury to ending a decorated career as state champion.

Gonzales said a gust of winds right off the blocks worried him a bit, but it wouldn’t be long before he hit his full stride.

“Coming off the last hurdle on the curve and just opening up my stride and sprinting all the way through,” Gonzales said when asked when he felt the race was his.

He didn’t break a personal mark, but the UCLA-bound Gonzales said it was an amazing accomplishment. He pulled a left hamstring and rolled his left ankle in a meet before the start of league his junior season.

“I had an opportunity to run at the world youth trials,” Gonzales said. “I asked my coach and he said I should recover and rehabilitate.”

The move paid dividends.

In the same race, Diamond Ranch’s Andrew Fischer finished ninth with a time of 38.35.

Maranatha’s Ebony Crear accomplished her goal of reaching the state finals in the 100 hurdles. She finished seventh in 14.18.

Crear, the sophomore daughter of two-time Olympic medalist Mark Crear, almost didn’t finish the race.

“The third hurdle I hit it with my right leg and buckled,” she said.

“But I’m just happy I was able to recuperate and keep going. Just do my best because I hit the hurdle.”

In the 400, Arcadia’s Alex McElwee finished seventh with a time of 48.86 while San Marino’s Kyle Ezold, in his first year running track, came in eighth at 49.50.

Bonita sophomore Nikki Wheatley finished eighth in the triple jump with a mark of 37-8 3/4.

La Salle’s Daniel De La Torre got off to a strong start in the 1,600, but it all went wrong 800 meters into the race.

“My muscles started tightening up,” he said.

De La Torre was visibly disappointed with the result, a ninth-place finish in 4:16.38, but he bounced back strong in the 3,200, the final event of the night. He finished fourth with a time of 9:06.60. Arcadia’s Sergio Gonzalez, who scratched from the 1,600 preliminaries, finished fifth at 9:10.46.

De La Torre was about a minute off his personal mark, and though he earned a medal and a spot at the podium it wasn’t enough to bring a smile to his face.

“Whoever aspired to be fourth … not very satisfying for me,” he said. “I never aspire to be that. I use my failures to succeed and help me next year. I plan on winning state next year for cross country and track I want it more than I want to breathe.”

De La Torre, in his first real year of track after several injuries his sophomore year, finished third at the state cross country meet last year.

“I just have a lot more to prove,” he said. “I’ll prove myself next year.”

miguel.melendez@sgvn.com

Read more:http://www.pasadenastarnews.com/sports/ci_20771484/high-schools-south-pasadenas-kieffer-wright-jumps-state#ixzz1wqf1L6ha