Will student loan repayment resumption crash the housing market?

[Anonymous]

Anonymous wrote:People on this board are so out of touch that they have no clue how much this impacted spending habits for a huge segment of the population. For many folks, it was like having $2K extra in your pocket every month, and lots of folks are not great savers, so that extra money was often spent rather than being saved. It's going to be a total s***show once people have to start paying on their loans again.

I don’t doubt this but are those people who own homes in the dmv?

[Anonymous]

I think it will. People are bad money managers.

[Anonymous]

I'm a buyer with no debt so I'd be thrilled if it cooled my competition off a bit, but I'm not counting on it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much? Lol it’s a lot of money, like 5 billion a month in payments!!!! It will have a major effect on the entire economy.

"The pause is gone within 60 days of this being signed," McCarthy told Fox News anchor Shannon Bream. "So that is another victory because that brings in $5 billion each month to the American public."

Except that Biden has changed the federal loan repayment formula through the Department of Education, effectively requiring only pennies on the dollar repayment with generous forgiveness terms.

Oh how I wish this were true. -person above who will be paying $1200/m on $90K a year from now.

I was paying about $630/month on balances of more than that. And that was years ago. Something wrong with your choices.

It’s based on salary so I must earn more than you did years ago.

[Anonymous]

Anonymous wrote:I owe $90K and have to start repaying $500 a month in August after that next April it goes to $1200/month. It is still worth it to hang on to get $59K forgiven through PSLF in 3 years but it’s making me effectively net level with any raise. I’m just finishing paying off two covid-induced debts when this one restarts. I am a perpetual renter and may never be a homeowner.

Join the club

[Anonymous]

Anonymous wrote:

Anonymous wrote:I owe $90K and have to start repaying $500 a month in August after that next April it goes to $1200/month. It is still worth it to hang on to get $59K forgiven through PSLF in 3 years but it’s making me effectively net level with any raise. I’m just finishing paying off two covid-induced debts when this one restarts. I am a perpetual renter and may never be a homeowner.

Join the club

Why did you take out $90k in the first place? And, why should I pay for your decision via inflation?

[Anonymous]

I think the impact on home sale prices will be secondary or tertiary. I’m assuming the first things that get hit are restaurants, leisure travel (including AirBnBs, which due to regulation there aren’t a ton of in DC, so this will probably limit the spillover), and basic but labeled “luxury” apartment rents.

[Anonymous]

Anonymous wrote:I think the impact on home sale prices will be secondary or tertiary. I’m assuming the first things that get hit are restaurants, leisure travel (including AirBnBs, which due to regulation there aren’t a ton of in DC, so this will probably limit the spillover), and basic but labeled “luxury” apartment rents.

The issue with these things is how much spillover there is to other parts of the economy. E.g., corporations make less money, stock market goes down, layoffs accelerate, etc. Could be no impact or could be significant -- really impossible to say. But for anyone who believes that covid handouts created the economic mess we're in, it's extremely notable that this is the last handout to survive, and it is a massive one.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I owe $90K and have to start repaying $500 a month in August after that next April it goes to $1200/month. It is still worth it to hang on to get $59K forgiven through PSLF in 3 years but it’s making me effectively net level with any raise. I’m just finishing paying off two covid-induced debts when this one restarts. I am a perpetual renter and may never be a homeowner.

Join the club

Why did you take out $90k in the first place? And, why should I pay for your decision via inflation?

To get a graduate professional degree that quadrupled my earning power. And inflation is happening bc of the four trillion dollars the treasury added to the economy during COVID while holding interest rates too low for too long. You’re an idiot. Why should I pay for your absurdly low mortgage rate via inflation? That’s the real story.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think the impact on home sale prices will be secondary or tertiary. I’m assuming the first things that get hit are restaurants, leisure travel (including AirBnBs, which due to regulation there aren’t a ton of in DC, so this will probably limit the spillover), and basic but labeled “luxury” apartment rents.

The issue with these things is how much spillover there is to other parts of the economy. E.g., corporations make less money, stock market goes down, layoffs accelerate, etc. Could be no impact or could be significant -- really impossible to say. But for anyone who believes that covid handouts created the economic mess we're in, it's extremely notable that this is the last handout to survive, and it is a massive one.

No, the last handout to survive is the 90%+ of homeowners who have fixed rate 30 year mortgages under 3.5%. That’s by FAR more impactful in causing and perpetuating inflation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Take a wild guess, where we are in this...

Ooh, you found a random graphic on reddit. You must now be an economist. Congrats on defending your dissertation.

Wasn't from Reddit, and I AM an economist.

No, I did not write a dissertation, nor did I need to.

[Anonymous]

I doubt slackers living in mommy’s basement playing Xbox will crash the housing Market.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think the impact on home sale prices will be secondary or tertiary. I’m assuming the first things that get hit are restaurants, leisure travel (including AirBnBs, which due to regulation there aren’t a ton of in DC, so this will probably limit the spillover), and basic but labeled “luxury” apartment rents.

The issue with these things is how much spillover there is to other parts of the economy. E.g., corporations make less money, stock market goes down, layoffs accelerate, etc. Could be no impact or could be significant -- really impossible to say. But for anyone who believes that covid handouts created the economic mess we're in, it's extremely notable that this is the last handout to survive, and it is a massive one.

No, the last handout to survive is the 90%+ of homeowners who have fixed rate 30 year mortgages under 3.5%. That’s by FAR more impactful in causing and perpetuating inflation.

40 percent of primary homeowners have zero mortgage. Look at Avenil up the block from my in Potomac built in 1991 do you really think the 1991 buyers now older have mortgages?

The bigger issue is people with ballon or ARM. I work at a bank and we have some ARMs and Ballon mortgages on books will be an ugly reset. Not much but the few we have Ugg.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think the impact on home sale prices will be secondary or tertiary. I’m assuming the first things that get hit are restaurants, leisure travel (including AirBnBs, which due to regulation there aren’t a ton of in DC, so this will probably limit the spillover), and basic but labeled “luxury” apartment rents.

The issue with these things is how much spillover there is to other parts of the economy. E.g., corporations make less money, stock market goes down, layoffs accelerate, etc. Could be no impact or could be significant -- really impossible to say. But for anyone who believes that covid handouts created the economic mess we're in, it's extremely notable that this is the last handout to survive, and it is a massive one.

No, the last handout to survive is the 90%+ of homeowners who have fixed rate 30 year mortgages under 3.5%. That’s by FAR more impactful in causing and perpetuating inflation.

40 percent of primary homeowners have zero mortgage. Look at Avenil up the block from my in Potomac built in 1991 do you really think the 1991 buyers now older have mortgages?

The bigger issue is people with ballon or ARM. I work at a bank and we have some ARMs and Ballon mortgages on books will be an ugly reset. Not much but the few we have Ugg.

I have no sympathy at all for anyone who (i) purchased in the period when we had historically low interest rates; and (ii) has an ARM or a balloon payment mortgage. And I doubt there are enough of them to have a nationwide impact on the housing market.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think the impact on home sale prices will be secondary or tertiary. I’m assuming the first things that get hit are restaurants, leisure travel (including AirBnBs, which due to regulation there aren’t a ton of in DC, so this will probably limit the spillover), and basic but labeled “luxury” apartment rents.

The issue with these things is how much spillover there is to other parts of the economy. E.g., corporations make less money, stock market goes down, layoffs accelerate, etc. Could be no impact or could be significant -- really impossible to say. But for anyone who believes that covid handouts created the economic mess we're in, it's extremely notable that this is the last handout to survive, and it is a massive one.

No, the last handout to survive is the 90%+ of homeowners who have fixed rate 30 year mortgages under 3.5%. That’s by FAR more impactful in causing and perpetuating inflation.

40 percent of primary homeowners have zero mortgage. Look at Avenil up the block from my in Potomac built in 1991 do you really think the 1991 buyers now older have mortgages?

The bigger issue is people with ballon or ARM. I work at a bank and we have some ARMs and Ballon mortgages on books will be an ugly reset. Not much but the few we have Ugg.

Incorrect. It's closer to 20%, not 40%.