March 29, 2019
What Did High Education Costs Have to do With the Foreclosure Crisis?
When it comes to the financial and housing crisis of 2008 that led to what is commonly referred to as the “Great Recession,” the most often mentioned culprits are subprime lending and unemployment rates. But it turns out that’s only part of the story, and the more that researchers stitch together the data from that time period, the more nuanced the picture becomes. A newer wrinkle in the scenario seems to be that the costs of higher education may have played a significant role.
The Population Association of America’s bimonthly scientific journal, Demography, published a study in August 2018 that analyzed the impact on rate of foreclosures in America of families with children seeking out higher education from 2005-2011. This study covered almost 85 percent of the nation’s population, and revealed a definite correlation between the number of families in a given year that were sending their young ones to college and the number of foreclosures that took place in the same year.
It was already known that some families with children were more likely to go through foreclosure during the Recession, and this report gives us a higher-resolution picture of why that may be.
It also provides us with another picture into why Millennials may be less likely to invest in housing at present than were their predecessors when they were the same age: not only do they carry the debt associated with higher education, but a significant number of them saw the high price their families paid as well in losing the homes they had hoped would be one of their most significant investments—due in part to the cost of their own Millennial’s education.
All told, it becomes clearer and clearer that straining the financial situation of families and homeowners—whether through the high monthly payments due on risky subprime mortgages, the loss of work in a diminishing labor market, or the burden of educational debt on a family that can scarcely afford it—contributes to financial crises in a myriad of ways, and that these effects can snowball if not checked.
Whether the housing market is stable or volatile, we here at Topouzis & Associates, P.C. do everything we can to be absolutely sure our clients are conveying and purchasing property title clear of judgments and defects. And, yes, we help our clients put into place a good policy of title insurance to make certain they don’t get surprised by any nasty lurking issues with a property. Contact us if you’d like us to do this for you.