Student loan debt, the housing market and a plan that could get us out of this mess

People who have followed my work over the years know that I have railed against the student loan debt crisis in this record-breaking expansion for many years.

I believe, like most political-economic stories, things get exaggerated. Again, dear chickens, it might be raining but please don’t confuse that with a falling sky.

Logan Mohtashami
Logan Mohtashami, Columnist

That said, let’s look at the housing market and student loan debt. 

To state the obvious, if the government wiped out all the student loan debt in this country and only the “Super Rich” has to pay the taxes for the hit, it is nothing but a positive for the housing market. This is because you just wiped out a debt payment and a debt balance to nothing. 

However, the context is critical. Millennials are the biggest homebuyers in America. 

What I don’t like about the reporting of housing in America is this:

On the one hand, people say the demand from Millennials is very healthy, and we need to build more homes. Then, next week you hear a story that we have an affordability crisis, and Millennials are not buying homes due to student loan debt. In a coherent world, these two statements can’t exist in the same cycle. 

Since the start of the century, the clients I had that were under the age of 40 that had big nominal debt loads made good money. It didn’t prevent them from buying a home, but it did prevent them from buying a bigger house if they wanted one.

The income capacity you get from finishing college and working your but off is a good thing, not a bad thing. Dual household college-educated houses, from my perspective, are doing well in this country.

The stress in the data, as you can see below, are those who never finished college.

Student loan default 2

Young Americans buy homes later in life, so don’t use the age group 25-29 as your sample group to prove student loan debt is preventing Millenials from buying. It’s much different now than in the past because more people go to college, finish college and get married later in life. 

People, rent, date, get married and then 3.5 years after marriage, they have kids. Look at the data line from people or households 30-39, not 25-29.  

Age demographics aside, let’s take a look at student loan debt more coherently. 

The majority of student loan debt has a debt of $17,000 and below. Typically the more significant the student loan debt, the bigger the income capacity.  


Did you know that the peak unemployment rate for college graduated Americans in the great recession with a Bachelor’s degree or higher was 5%?

You can see below that not only are college-educated Americans making more money than those that never finished college, they’re also the mostly employed, always. 

2018 Education and Income weekly data

College-educated Americans that finish school make at least $2 to $5 million in their lifetime through income, and they’re the group most likely that would have access to stock options.

2019 Median Mean Income College education

College-educated Americans who finish school are in the upper economic food chain in America. We should be focusing our time and resources on those who don’t have any education, skillset training and are indeed income stressed.

All of that said, if I had to propose a plan that wouldn’t get bogged down on how are we going to pay for it or who are we going to raise taxes on, it would look like this. 

1. A deficit-financed $17,000 write down on all student loan debt. No taxes raised. Call this a stimulus plan, even though I don’t believe the velocity would be tremendous. This plan will be a one time hit on the deficit. The key here is that the majority of Americans who have student loan debt and are struggling would have zero liability.

2. A national refinance plan where the government is on the hook, not the banks. Americans who finish school and work hard are the ones making money.

The plan would create better cash flow for those Americans who have a more significant debt load. This loan will be amortized in a fashion the student feels like that best suits their financial goals without going over 37 years.

3. Make student loan interest payments tax-deductible. This idea is similar to the Mortgage Interest Deduction we have for housing.

4. Also, allow student loan debt to be part of a bankruptcy.

5. I understand the frustration of Americans who worked so hard to pay off their student loan debt in a responsible way. Also, the more critical factor is that these Americans went to school and finished. I hear it all the time: “Why do college dropouts get assistance on debt and I don’t get anything for doing the correct thing?”

To that I say, you’re very accurate. This action is why I would create a commission to look into compensating Americans who not only worked hard to finish college but also paid back their student loan debt. Our American work ethic has always been our strength and pride.

I know, I know, some people will say this is more government subsidization that will in itself create more inflationary pressures on the growth of education. To that point, you’re correct.

However, if I had to create this student loan plan, this is less complicated in the sense that it wouldn’t hit so many roadblocks in the Senate, and it helps the majority of the Americans that have student loan debt and aren’t making $100,000-$500,000 a year.

The government is the monopoly player here in the student loan debt business, so they would take the hit on the books and lose future revenue that would collect.

This is a balanced approach that helps those that are for sure struggling with the student loan debt without giving a big write-down to Americans who will make $2 to $5 million dollars in their lifetime. 

And as I stated from the start, if the government wiped out all student loan debt and only the “Super Rich” has to pay the taxes for the hit, it is nothing but a positive for the housing market.

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Source: HousingWire Magazine

Commercial real estate data and analytics provider CrediFi confirms it is shutting down

Late last week, reports began to emerge that CrediFi, a commercial real estate data and analytics provider that had raised nearly $30 million in funding over the last five years, was planning to close up shop.

Now, the company has confirmed that it is shutting down in a matter of days.

In a letter sent to clients and subscribers, CrediFi CEO Ely Razin stated that the company is shutting down its data platform “over the coming days.”

Razin’s admission came in an email to clients offering them a chance to “get great data at close-out prices,” with the email simultaneously confirming the company’s fate and offering clients one last chance to buy the company’s data offerings.

“It has been our pleasure to serve the CRE community with our market-beating data about Real Estate Financing and Ownership information. Unfortunately, as you may have heard, we are shutting down the CrediFi data platform over the coming days,” Razin said in the email.

“This presents a unique opportunity for you. During these last few days, you’ll now be able to buy our powerful data to help drive your business, at closeout prices!,” the email continued. “Were [sic] offering you the last chance to purchase top-notch CRE data such as; property information, loans coming due, owners’ and their portfolios.”

The undoing of CrediFi came quickly, as it was just a few months ago that the company was adding “top tier clients.”

Nearly a year ago, the company raised $6 million from a number of investors, including Liberty Technology Venture Capital II, and joined by investors Mitsui Fudosan, one of Japan’s leading real estate investors, and Maverick Ventures Israel.

Several of the company’s existing investors also participated in the funding, including Battery VenturesViola Ventures and crowdfunding site OurCrowd.

That funding brought CrediFi’s total capital raised to $29 million.

But the company is now days from shutting down.

The post Commercial real estate data and analytics provider CrediFi confirms it is shutting down appeared first on HousingWire.

Source: HousingWire Magazine

Austin Board of Realtors settles with CoreLogic over selling home sales data

The Austin Board of Realtors reportedly reached a settlement with CoreLogic over claims that the data provider was improperly selling home sales data to the local appraisal district.

The details of the settlement come courtesy of Austin’s KXAN, which recently reported that the ABoR sent a letter to its members that the parties reached a settlement over claims that CoreLogic was selling actual home sales information to the Travis County Appraisal District.

From KXAN:

The data obtained by the Appraisal District is usually reserved for realtors and companies like Zillow.

The state of Texas doesn’t require disclosure of real estate prices.

“Market values are typically higher than what the appraised values are,” said Chris Beer of Green City Realty. “And because Texas is a non-disclosure state, the data shouldn’t just be out there.”

The appraisal district said in a statement that CoreLogic to the district the company had the right to provide the sales data, but the ABoR disputed that claim, and filed a cease-and-desist letter to put a stop to CoreLogic’s alleged actions.

And the ABoR and CoreLogic recently reached a settlement in the matter, but terms of the settlement were not disclosed.

The post Austin Board of Realtors settles with CoreLogic over selling home sales data appeared first on HousingWire.

Source: HousingWire Magazine

Here's what renters want more of in 2020

Multifamily housing has seen a lot of change and adaptation this decade.

The 2020 Apartment Resident Preferences Report released by the National Multifamily Housing Council and Kingsley Associates collected input from renters all across the U.S.

The report found many differences in the way we live now. From smart home technology to pet amenities and co-living spaces, here’s what renters want to see more of.

“While emerging technologies have allowed communities to offer virtual tours and other opportunities for online engagement, we found that the majority of renters still prefer an in-person tour with a community representative,” said Rick Haughey, NMHC’s vice president of industry technology initiatives. “That said, 14% of renters noted they would rent an apartment sight unseen.”

Younger renters expressed an interest in short-term rentals, according to the report. Across the U.S., nearly 60% of those surveyed said having short-term rentals would either positively impact their perception of a community or have no effect at all.

Only 16% said they wouldn’t rent at a community that allowed short-term rentals.

Even though 42% of those surveyed said they telecommuted at least part-time, 15% said they had or would use a coworking space, while over half said they were interested in an on-site business center.

Co-living made an entrance in 2019, but nearly 70% said they would not be interested in this type of living situation.

Of course, technology made the most significant impact on the way renters live. Even though over a third of respondents said they already own devices like Amazon Alexa or Google Home, 43% said they were interested or would not rent without a virtual assistant.

Notably, in 2020, multifamily housing professionals will need to look beyond their human clientele. According to the survey, not only were renters enticed to rent from a place with pet amenities, they’d be willing to shell out extra money as well.

According to the report, more than a third of respondents were pet owners, most of them owning dogs. Dog owners said they would pay $28 to $34 more per feature per month for perks such as a community dog park among other pet services on site.

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Source: HousingWire Magazine

Regulators raise annual CRA asset thresholds

The three federal agencies announced slight adjustments in the cutoffs for “small” and “intermediate small” institutions for the purposes of Community Reinvestment Act exams.
Source: American Banker

Foreclosure starts fall to lowest level in 20 years


Foreclosure starts are now at the lowest level of the millennium, according to a new report from Black Knight.

November’s foreclosure starts marked a 26% decline from last year’s total. This is the lowest monthly volume since Black Knight began recording the metric in 2000, the company said.

Nationally, the foreclosure rate fell 3% from October, hitting its lowest level since 2005.

In November, there were 49,898 U.S. properties with foreclosure filings, ATTOM Data Solutions reported. The company also reported that foreclosure starts were up 13% in October then completely made a u-turn and went down 13% in November.

Although in November, delinquencies rose, they still remain around 5% lower than last year’s level.

Prepayment activity also fell 19% from October’s six-year high.

This is due to seasonal declines in home sale-related prepays and high-interest rates impacting refinance incentives, the report said. However, prepayment activity is still 123% above this point last year.

The delinquency rate went up this month by 4.18%, but still remains 4.72% lower year over year.

Mississippi had the highest amount of foreclosure starts at 10.44%. Louisiana follows at 7.84%; Alabama at 6.83%; West Virginia at 6.68% and Arkansas at 6.23%.

Colorado had the least amount of foreclosure starts, at 1.81%. Washington followed at 1.86%; Oregon at 1.9%; Idaho at 1.98% and California at 2.09%.

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Source: HousingWire Magazine

Why the C&I slowdown is likely to persist in 2020

Political uncertainty, sector-specific concerns as well as interest rate and labor trends may continue to depress commercial and industrial lending in the coming months.
Source: American Banker

Top stories of the year: BB&T-SunTrust, a payday lender in disguise, unprepared for Libor’s exit, and more

The merger of BB&T and SunTrust, the largest bank deal in over a decade, dominated news throughout the year; New York investigated the wage access app Earnin, which critics claimed was actually a stealth payday lender; Libor is going dark in 2021, and some banks aren’t ready; and more from this year’s most-read stories.
Source: American Banker

Bitcoin, despite its ups and downs, had a monster decade of growth

The largest digital token has posted gains of more than 9,000,000% since July 2010, according to data compiled by Bloomberg.
Source: American Banker

FHFA: U.S. home prices climb 5% from last October

Home prices increased in October, rising only 0.2% from the previous month but up 5% from 2018, according to the latest monthly House Price Index from the Federal Housing Finance Agency.

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.

The report explains across the nine census divisions, the West South Central and East South-Central divisions saw the strongest appreciation growth, as both rose by 0.7% in October. The East North-Central division, which experienced no growth, saw appreciation decline by 0.5%.

According to the FHFA, the 12-month changes were all positive, with the New England division posting the smallest gain of 3.5%, and the Mountain division leading the way with a 6.7% increase.

These are the states located in each division mentioned:

West North Central: North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas, Missouri

East South-Central: Kentucky, Tennessee, Mississippi, Alabama

East North Central: Michigan, Wisconsin, Illinois, Indiana, Ohio

New England division: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut

Mountain: Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico

The chart below compares 12-month price changes to the prior year:

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Source: HousingWire Magazine