, Semesterz
If the current interest rates rise, it will probably take 37 years for
people to save up to buy a home. The majority of people wrongly assume
that the record low rates of homeownership amongst young adults is due
to high student loan debts but research undertaken by the Apartment List
shows that this is not the case. There is actually a far bigger
problem, this being low wages and high house prices which is even more
of a problem for those without a college degree.
[post_ads]Andrew Woo, headed up the research for the rental website and
discovered those adults that never attended college or was awarded with a
degree are in an even worse position than those with a degree when it
comes to purchasing a house, and this is even with the student debt
being taken into consideration. The research surveyed 31,000 adults
between 18 – 34 years old. Woo was able to determine that it takes an
average person with no degree 15 years to be able to afford a house
which is five years more than a graduate with debt.
The survey carried out by Apartment List found that those without a
college degree on average save about $2,000 per year which is about
$1,000 less per month than a graduate of the same age with college debt.
The rental site Trulia used by Woo suggests that the average starter
home is priced at $155,000 and it is this price that was used to base
the figure of 15 years to save for the down payment.
This is all well and good, but this would only actually be the case
if mortgage rates stay static at the historic low of 3.5% that is being
enjoyed currently. At these rates, the amount owed after the down
payment would be ok even for those without a degree based job. However,
if the mortgage rates return to the average that has been seen in the
past 10 years, 5.5% it would take someone without a degree a further
eight and half years to be able to afford the home, in other words 23
years. Worst case scenario the rates go back to what they were 15 year
ago at 7.3% then the wait to buy a house for those without a degree
would shoot up another 22 years to give a total of 37 years old.
The math above is based on an average house in an average city. San
Francisco is the second most expensive city for starter homes and here
it would take a non-graduate almost 50 years and this is just to save
the 20% deposit and this is an enormous jump from the 11 years that it
would take a college graduate without loans would have to wait. When you
factor in rising interest rates it is ridiculous and means that for
those without a degree they would be looking at saving for well over 100
years to afford their first house!
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I think that it can definitely be concluded that in order to get on
the property ladder at all it is only those with a degree that can find
employment that pays enough to make their property dreams reality.
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