Subject Line Ideas: Education hurting homeownership?
Decade of growth for housing
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Feature Article:Education hurting homeownership?
Critical Reads:Decade of growth for housing
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I’m one of those people who don’t believe college is for everyone. And even if you’re not the next Bill Gates or Mark Zuckerberg, there are good livings to be made without a college degree. For the most part. But don’t let the desire to own a home keep you from college or vice versa. Despite what the media want us to believe, it’s not one or the other.
If you’re ready, let's dig in...
Education Hurting Homeownership?
In last week’s newsletter, I took exception to a headline that said “Gen-Xers don’t want to be homeowners.” As I explained, there are fundamental reasons homeownership among Gen X has dropped, but no survey I’ve seen indicates they don’t WANT to be homeowners. In fact, nowhere in the article was there anything about wants. Hence my problem with the headline.
Now I have another problem with another headline, from the same website, no less: CNN Money. I get that they’re just trying to get clicks, but these headlines are misleading. Here’s the latest:
“A college degree can make it harder to buy a home.”
What the headline meant to saywas: “Student loan debt makes it harder to buy a home.” That’s what the article concluded. But that’s the no-duh, no-clicks headline, so let’s go for click-baity sensationalism instead.
The article cited a Trulia study that showed saving for a down payment on a home can be done faster in 30 of the nation’s 100-largest cities if you don’t have student-loan debt. That means that in 3 out of every 10 cities, the down payment for a median-priced home can be saved up for a little more quickly on the average non-degreed income vs. a college-graduate income that includes student-loan debt.
First off, let’s recognize that it’s the debt, not the degree – as the headline stupidly proclaims – that that makes saving harder. Second, let’s recognize that in 70 percent of the country, this doesn’t apply – it’s mostly in the most affordable markets. And thirdly, let’s recognize that there’s not that much of a difference in the time required to save.
In fact, the city for which it takes someone with no degree the least amount of time to save a down payment is Detroit. According to the Trulia report, it takes an average of 4.1 years. What’s city for the least amount of time for saving WITH a degree? Detroit, at 5.3 years.
CNN Money lists both the 10 fastest-to-save markets with a degree and without. Not surprisingly, 9 of the 10 markets are the same ones. And the Detroit example above, with a difference of a mere 1.1 years, is actually the biggest spread between those with a degree and without. Most of the other places in the top 10 range between 2.5 months and six months.
So that college degree the headline warns you about means that in 3 of every 10 markets in the country, your student loan debt could set you back as much as six months of time waiting to buy a home.
This is big news?
If only there were a way we could compare the longer-term impact on income that having a degree vs. not having a degree has. You know, to determine whether that long 2.5 to six months of waiting is worth it. Oh, yeah, we DO have a way.
A renowned economist, the University of Rochester’s Ronald M. Schmidt, analyzed for the Congressional Budget Office the differences in incomes for high school graduates compared to college graduates over the years. He concluded that in 1987, those between the ages of 25 and 34 earned an average of $22,595 without a degree and $31,631 with a degree. If the numbers were similar today, that would mean the typical 25-to-34-year-old would have to have $753 per month in student-loan payments to be in the same financial position as a peer without a degree.
But here’s the real story: Twenty years later, for workers ages 45 to 54, those averages were $46,667 and $88,242. In other words, in 20 years, the average college graduate’s salary is almost double the average non-graduates. Today, they are separated by almost $42,000 a year. That’s a huge difference.
It’s a huge enough difference, in fact, that I’d probably put up with that extra few months of having to save the down payment on my first home. I’m all for homeownership, and, again, I’m not one who believes everyone needs a college degree. But every set of statistics you’ll ever see shows that the income disparities over a lifetime are staggering. The little bit of extra time it takes for someone to save for their first home – especially in only 3-tenths of the country – is not worth trading the lifetime income advantage afforded to those with a college degree.
No matter what a stupid headline tries to tell you.
Decade of Growth for Housing
Despite the headwinds that real estate faced for years, the slow-to-develop recovery has finally seemed to hit full-steam. Home sales this year are projected to hit their highest level since 2006, when the real estate market peaked. This is despite a relative shortage of homes for sale. As respected real estate columnist Jim Woodward opines, housing is poised for a decade of growth.
How Climate Change Could Affect Your Finances
Maybe you believe in climate change, maybe you don’t. Either way, you can’t deny that it’s in the news. A lot. If climate change IS, in fact, inevitable, then it’s going to change other things, too. As this piece from U.S. News & World Report suggests, your finances could be one of the things feeling the impact.
10 Tips from the Pope for Living Happier
If you think about it, one of the primary pursuits of just about anybody throughout their lives is to live happy. That pursuit is recognized by the United States government as a right, in fact. If you’re trying to live a happier life, you might want to read this Goodnet.org article, which shares 10 tips for living a happier life…from Pope Francis.
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