A FLEETING DREAM: HOME OWNERSHIP FOR YOUNG AMERICANS
Many young Americans continue to hold the prospect of home ownership in high esteem despite facing rising rental costs, tougher loan regulations, and staggering student loan debt. According to Gallup’s 2013 Economy and Personal Finance survey, approximately 70% of Americans aged 18 to 29 currently do not own a home, but they plan on buying one within the next 10 years. Young Americans cite several reasons for desiring home ownership, including: lack of building equity, inability to alter their living environment, and unpredictable rent increases.
One of the main factors impacting young Americans’ ability to become homeowners is high rental prices. Trulia reported the average annual rental increase to be 3.9%—far outpacing inflation and income growth. In addition to receiving lower salaries, over half of young Americans spend 30% or more of their income on housing; in 1960, only a quarter of renters spent that much (according to the Harvard Joint Center for Housing Studies). With data like this, it is no wonder young Americans have trouble buying a home.
To further compound the situation, the FHA recently announced it was drastically reducing loan limits for FHA-insured loans. The FHA also reset metropolitan statistical (MSA) median home prices to 2008 prices instead of 2007 prices (when prices were at a peak), which previously prevailed. Thus, young people are less able to receive the loan amounts necessary to purchase a home in higher paying areas.
Finally, many young Americans are saddled with substantial student loan debt, which is often times coupled with high interest rates. According to a report released on December 4, 2013 by the Institute for College Access and Success’ Project on Student Debt, the average student loan debt for graduates of a four year college is $29,000.00. Approximately seven in ten seniors graduated with student loan debt. With a monthly loan payment of several hundred dollars, today’s young people simply cannot save enough money to afford a home.
Although challenges to home ownership exist for young people, the desire to own a home is definitely there. Despite the negative data, there can be a positive side from a Realtor® standpoint. For instance, approximately 21% of young Americans already own a home. Considering this fact with the fact that 70% of young Americans desire home ownership indicates there are very few young Americans who have no intention of becoming homeowners.
What does this mean for Realtors®? Young Americans can be a large customer base. As such, there are a couple of things sales agents should be doing. First, agents should include renters and young adults in their marketing campaigns so the agent comes to mind when they are ready to buy. Second, agents must become familiar with all financial tools and programs that would benefit this segment of the population (e.g., lease-option contracts, student loan consolidation). If an agent can make it financially feasible, there is a high likelihood of making the dream of home ownership a reality for young adults.
I RENTED A HOME THAT I JUST DISCOVERED IS BEING FORECLOSED. CAN I BE EVICTED WITHOUT NOTICE?
With the increase in the number of foreclosures, this is a common question. There have been many instances of unsuspecting renters who sign year-long leases, and suddenly are forced out of the home by a new home owner. In order to curb this problem, the Federal Government enacted the Protecting Tenants at Foreclosure Act of 2009 (“PTFA”). The PTFA provides protection to individuals with a “bona fide tenancy”, and requires a 90 day notice before evicting the tenant from the property. Protecting Tenants at Foreclosure Act of 2009 (Pub. L. No. 111-22, Div. A, Title VII, 123 Stat. 1632, 1660-62 (2009)). In addition, the PTFA provides that if the tenant has a “bona fide” lease, the tenant may be permitted to stay in the property for the term of the lease. Id. While the PTFA is a Federal Law protecting the tenants rights, it is important to note that state law is still in effect. Landlords and tenants must still abide by Florida Tenant and Landlord law and, for example, tenants are still required to pay rent timely and may be evicted for nonpayment.