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40 POTENTIAL NEW HOUSEHOLDS HELD BACK BY SLOW ECONOMIC RECOVERY, DEBT FEARS As the U.S. homeownership rate continues to dwell near its lowest level in two decades, two recent studies suggest that student debt is having a significant stagnating effect on the housing market and that Americans are giving up some personal autonomy to cope. A recent survey commissioned by NeighborWorks America, a Washington, D.C.-based nonprofit community development corporation, revealed that nearly one out of four Americans knows someone who has delayed buying a home because of student loan debt. NeighborWorks' Second Annual America at Home Survey showed that student loan debt and perceived overtightness of lending has prevented or delayed homeownership despite the fact that 60 percent of American adults surveyed said owning a home was either "the most important" or a "very important" part of the American dream. "Earning a postsecondary degree is increasingly critical in the United States, but student debt is preventing some Americans from purchasing a home and fully fulfilling this 'American Dream' aspiration," said Chuck Wehrwein, acting CEO of NeighborWorks America. "If we don't mitigate the effect student loan burden is having and will have for years to come on homeownership, the country will lose a significant amount of economic activity and hundreds of thousands of people will be unable to benefit from the stability and financial value that homeownership has been proven to offer." Forty-nine percent of those who had student loan debt said the debt was an obstacle to their purchase of a home. Student loan debt was the single largest obstacle to homebuying among those who have debt, with 17 percent. Lack of a down payment was the second-largest obstacle, with 14 percent, the survey found. e survey revealed that of those with student loan debt, 20 percent are more likely to say their opinion of homeownership has changed for the worse over the past five years. It was also revealed in the survey that while African-Americans and Hispanics make up 20 percent of the U.S. population, those two groups accounted for 29 percent of the student loan debt nationwide. Also, women made up 58 percent of those with student loan debt. Housing counseling and education is an option to reduce risk for borrowers who are unable to purchase a home because student loan debt makes their debt-to-income ratio impossible for them to be approved for a mortgage loan. According to the survey, 25 percent of consumers with student loan debt said they would consider housing counseling, while only 13 percent of consumers without debt said they would. "e earnings potential for college graduates increases over time," Wehrwein said. "By prudently investing in these graduates and counseling those who aspire to homeownership, more Americans can put down stronger community roots and become a larger part of our economy." But those coping with student debt may be going in the other direction. A new study from Zillow indicates that more than 5 million additional households are waiting in the wings to step into the market. According to the report, an estimated 32 percent of adults living in the United States were living with roommates or other adult family members in 2012. at compares to just 25.4 percent as recently as 2000. With that rise, Zillow says the median household size has climbed to 1.83 adults from 1.75 in 2000. A major part of that decline comes from stagnating wages, which came to a median $29,000 in doubled-up households in 2012. On average, Zillow says doubled-up adults make about 76 percent of the median income of people living without roommates, making it more difficult for those Americans to save up money for initial housing costs. In all, the country has lost an estimated 5.4 million potential households to the "doubling up" phenomenon, many of which are now waiting for the economy to get a point where they can strike out on their own. "e rise in doubled-up households is a troubling sign of the times and starkly illustrates one of the prime drivers behind weak home sales these days," Zillow Chief Economist Dr. Stan Humphries said. "But there is a silver lining behind this data. Like a coiled spring, all of these doubled-up households represent tremendous potential energy for the market." Once the nation does get to a point where would-be homeowners are able to clear the economic hurdles to homeownership, Humphries predicts demand could bounce back so much that household growth could outpace population growth. "ere is no magic bullet, but continued home affordability, an increasing supply of both for-rent and for-sale homes, and the potential for incomes to grow more quickly as the economy recovers will all help the market to realize this potential," Humphries said. Zombie foreclosures accounted for 18 percent of total properties in the U.S. that were in foreclosure for the third quarter of 2014, according to CoreLogic. KNOW THIS

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