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- By Esha Sarai
Projected US Real Estate Slump May Help Young Home Buyers
While unemployment climbs to the highest rate in the United States since the Great Depression of the 1930s, experts predict that real estate prices may decline and not recover for years.
“We know that over 30 million people have lost their employment over just the last five, six weeks or so,” Lawrence White, professor of economics at New York University Stern School of Business, told VOA. “That means a weak market. That's got to mean lower prospective transaction prices.”
But for young people and others who have maintained good financial standing, the market may afford a unique opportunity to buy their first homes.
Even now, some millennials are taking advantage of lowered interest rates and motivated sellers — even if they are technically out of work.
“A lot of it was just budget,” said Stephanie Nusbaum, 30, who recently purchased her first home with her husband in Asheville, North Carolina.
Nusbaum and her husband have been furloughed from their jobs, meaning they maintain their health insurance and the promise of eventually going back to work, though they do not have an income now.
But they said that between their savings, a stimulus check from the government of $1,200 per person, and unemployment benefits, they are confident that buying was the right decision for them.
“Our mortgage payment is actually less than our rent payment that we were making,” Nusbaum said, noting that their parents helped them with their down payment.
Millennials are often criticized and stereotyped for not buying homes or following other social norms of their parents’ generations.
But some real estate agents say they have noted that young buyers are just more cautious about making an investment unless they are sure it will be worth it.
“They came of age during a time where economically, it was very difficult,” said Tanya Salseth, a real estate agent in Washington, D.C., referring to the 2008 financial crisis. “And for that reason, I think they are almost better in tune with sort of the financials of a purchase, right? So, they are really looking at numbers, and they asked a lot of questions about, well, what is this property? What can it rent for?”
Defying all stereotypes, Courtney DeGennaro Robinson just bought her second home in Asheville, North Carolina, during the pandemic.
“The thing a lot of our peers don't necessarily realize is that it's not necessarily as unattainable as we sometimes feel like it is,” she said.
“When we started the process for our first home, I thought with our credit and our income, there's no way that we're going to be able to get approved for a loan. But there are actually a lot more programs out there for people our age,” she said, noting state-specific first-time home buyer credits.
Though she did note that buying a house under current circumstances was a bit different from her first experience.
“There were a lot of anxieties around, like, are we going to be able to have movers help us move? Our original plan was to just have friends and family come over and help us move our belongings and that became … not an option,” she said.
Though there are many questions around how the COVID-19 pandemic will change the real estate market across the United States, White of NYU notes that a big question will be where people, especially younger first-time home buyers, will choose to buy.
He says young home buyers have preferred urban areas to the suburbs where they grew up.
“There's a real open question about whether this trend will continue,” White said.
“Once we've made it through this pandemic, are people going to say, ‘Yeah, no, I just don't want to be in a high-density, urban area. That's the place where pandemics spread and spread rapidly. I want more open spaces,’” he said.
White likened this time to the real estate market immediately after the Sept. 11 attacks in 2001, when many experts predicted that more homes would be purchased away from crowded cities.
“They were predicting there was going to be a … weakening of property values, fewer people wanting to live in the five boroughs, especially in Manhattan, especially in lower Manhattan,” White said.
Six months after the attacks, Manhattan’s real estate market regained a sense of normalcy and enjoyed a boom until last year.
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College tuition has fallen significantly at many US schools, research finds
The cost of college keeps spiraling ever higher, right?
Not necessarily. New research indicates students are paying significantly less to attend public universities than they were a decade ago. And tuition increases at private colleges have finally slowed after years of hefty rises.
Figures compiled by the nonprofit College Board indicate the average student attending an in-state public university this year faces a tuition bill of $11,610, which is down 4% from a decade earlier when taking inflation into account. But the real savings come in what the average student actually pays after getting grants and financial aid. That's down 40% over the decade, from $4,140 to $2,480 annually, according to the data.
That reduced cost means less borrowing. Just under half of students attending in-state public universities are graduating with some debt, down from 59% a decade earlier, according to the College Board figures. And among those who do borrow, the average loan balance has fallen by 17%, to $27,100.
Meanwhile, at private colleges, tuition continues to rise, but at a much slower rate. It has increased 4% over the past decade, when taking inflation into account, to an average $43,350, according to the College Board. That's a big change from the two decades prior, when tuition increased 68%.
Costs are coming down as Americans question whether college is worth the price. Surveys find that Americans are increasingly skeptical about the value of a degree, and the percentage of high school graduates heading to college has fallen to levels not seen in decades, according to data from the U.S. Bureau of Labor Statistics.
Yet research still finds that, over time, a degree pays off. Americans with a bachelor's degree earn a median of $2.8 million during their careers, 75% more than if they had only a high school diploma, according to research from Georgetown University's Center on Education and the Workforce.
COVID effect
The COVID-19 pandemic has been a big factor in the cost reductions, said Jennifer Ma, an executive research scientist at the College Board and lead author of the study.
"We know that during COVID, a lot of institutions — public and private — froze tuition," Ma said.
As states and the federal government responded to the pandemic, Ma said, they increased higher education funding, allowing colleges to reduce the cost of attendance. Some of that money has since expired, however, including an infusion of federal pandemic aid that was mostly used up by the end of 2022.
Cost was a major consideration in Kai Mattinson's decision to attend Northern Arizona University. It would have cost her about $39,000 annually to attend the public university but discounts and scholarships bring that down to between $15,000 and $20,000 for the 22-year-old senior from Nevada.
"I originally wanted to go to the University of Arizona, but when it came down to tuition and other cost, Northern Arizona University was the best option," said Mattinson, a physical education major who also works as a long-term substitute at a local elementary school.
Many institutions have tried to limit cost increases. Purdue University in Indiana, for example, has frozen its annual in-state tuition at $9,992 for the past 13 years.
Mark Becker, the president of the Association of Public and Land-grant Universities, said he was pleased to see the new data.
"Institutional efforts to control costs, combined with many states' efforts to increase investments in public universities and federal investment in the Pell Grant, have increased college affordability and enabled significant progress on tackling student debt," Becker said in a statement.
Costs for those attending public two-year community colleges have fallen even more, by 9% over the past decade, according to the College Board data, which is broadly in line with federal figures collected by the National Center for Education Statistics.
Still, for parents paying for their children to attend out-of-state public universities or private colleges, the costs remain daunting — as much as $95,000 annually, in some cases. However, many institutions offer significant discounts to the sticker price for middle- and lower-income students.
Some private colleges have been expanding their financial aid, including the Massachusetts Institute of Technology, which in November announced undergraduates with a family income below $200,000 would no longer need to pay any tuition at all starting in the fall.
Other private colleges are discounting tuition as a marketing move in an increasingly difficult environment. They face a dwindling pool of young adults, and students who are more wary of signing up for giant loans. Recruiting students is crucial for staying afloat as operational costs rise. After temporary relief thanks to federal money during the pandemic, many colleges have cut programs to try to keep costs under control.
As regional schools struggle to survive, AI could provide hope
Declining enrollments are causing problems for some smaller, regional colleges struggling to survive.
But schools that embrace artificial intelligence and customer experience could be at an advantage, Eric Skipper writes in Times Higher Education. (December 2024)
Universities move away from DEI initiatives
Diversity, equity and inclusion initiatives have fallen out of favor in higher education recruiting and hiring in recent years, but even more colleges and universities are moving away from the programs now, Thea Felicity reports in University Herald.
In addition to political opposition to the programs, there are concerns that DEI initiatives hinder free speech, affect ideological balances and discourage academic freedom. (December 2024)
‘College Deserts’ leave many communities without higher education options
“College Deserts” – areas where high schools are located more than 30 miles away from the nearest community college – leave large groups of people unable to pursue higher education because of transportation problems, Lexi Lonas Cochran writes in The Hill.
Most college deserts are in the Southern U.S., with a recent study in Texas showing that long commuting distances discourage many potential students from attending college. (December 2024)
Analysts say rate of college closures likely to increase
If current trends continue, the rate of college closures is expected to increase, according to a new study reported in Forbes.
Closures are more likely to affect private institutions, and while the number of closures might seem small on a national level, it could cause serious problems for the smaller and mid-sized communities where those colleges are located. (December 2024)
