Young Columbia SC homeowners, as well as those "wanting to be homeowners" are struggling in the job market, which points to possible bad news for the housing industry.
According to the Bureau of Labor and Employment Statistics, only 74.8% of young adults are working — the lowest number in 12 months and far below normal levels. During the recession, between 73% and 74% of young adults were employed.
In addition to their struggles to find a job, many young adults are buried in a mountain of student debt. In fact, student loans are now the largest component of non-mortgage and home equity debt at $994 million.
So how are these unemployed and indebted young adults supposed to become Columbia SC homeowners and help the liquidity of the housing industry?
Mark Palim, vice president for applied economics and housing research at Fannie Mae, says that lack of job security is the biggest factor keeping young adults out of a home. "If you don't have income and if you don't think you’re going to be living somewhere for awhile because of a lack of job stability, then it makes perfect sense that you're not going to be buying a house," Palim said.
Student debt is inhibiting the ability to come up with a down payment for many young adults to become Columbia SC homeowners. The main idea is that it stretches out the amount of time it takes to pull together enough money. For those who can manage, they are often forced to handle a smaller mortgage.
Many homeowners who were on the verge of retirement, with funds set aside, were forced to spend that money on other things as money got tight during the recession. This translates into more people in the 55-plus-age group still in the labor force.
"They're not leaving the labor force," said Palim. Because many older adults are sticking around in the job market, there is less availability for young adults.
It may be some time before young adults can become Columbia SC homeowners. In the meantime, many are resorting to renting either single-family homes or within the multifamily sector.
Many renters can't afford to buy a Columbia SC home because they spend more than they make.
In a recent survey of 1,000 U.S. renters by Rent.com, an astonishing 61 percent said they spend more than they make every month. If you're renting and hope to someday be able to afford to buy a Columbia SC home, here are five ways you can work on curbing your spending habits.
5 Ways to Help You Buy a Columbia SC Home
Trim the Fat.
Nearly half of the renters surveyed (49 percent) said the hardest part about saving money is the fact that costs just continue to increase. While you can't do much about rising costs, you can stop spending money on things you don't need, and "doing without" is the way to eventually be able to afford to buy a Columbia SC home of your own.
For example, paying for a gym membership will burn more money than calories. Instead, create a mini home gym with some simple, inexpensive fitness equipment, like resistance bands or kettlebells, so you can stay fit without straining your wallet. If you don't watch a lot of television but you're paying for cable, consider switching to a cheaper online option, like Netflix or Hulu Plus. Instead of paying $60 to $100 per month for cable, Netflix runs about $9.00 per month. Toss the extra money into your "buy a Columbia SC home" savings account. Speaking of saving…
Learn to Save.
Life is unpredictable, but don't be one of the 26 percent of renters who said necessary-but-unbudgeted expenses are the hardest part about saving money. Put a small amount of your paycheck aside in an emergency fund until you have at least six times your monthly income. When your car breaks down or you need a root canal, you'll be glad you have the extra cash on hand.
Treat Yourself (Responsibly)
Impulse purchases were the downfall of 15 percent of the renters surveyed. Saving money doesn't mean you can't ever buy yourself anything. In fact, if you don't allow yourself some fun, you're more likely to break down and go on a spending spree. The key is to give yourself a limit by including monthly indulgences in your budget.
Find Some Free Fun
Going to bars and restaurants gets expensive. Just ask the 6 percent of renters who said socializing is the hardest part of saving money. There are plenty of things you can do with your significant other or friends for little or no money at all. Consider hosting a board game night or potluck dinner, getting active outside with a bike ride or hike, or attending a free community event. With a little creativity, you can have a good time without draining your bank account.
Find Some Budgeting Assistance
If you're just not good at budgeting, like the 4 percent of the renters reported in the survey, you're in luck. There are plenty of free online resources to help—and some even do the work for you. One good go-to budgeting helper is Mint.com, a highly-trusted, secure website where you can link your bank, credit cards, loans and investments, so you can see all of your accounts in one place. In addition to helping you stay on top of your finances, the site will also help you set and reach your financial goals of someday being able to buy a Columbia SC home of your very own.
For more tips on home buying, see our Columbia SC Home Buyer Tips section under the Columbia SC Real Estate Categories to your right.
We’ve already been talking about the sequester and what it could do to affect the Columbia SC economy. The sequester – $85 billion in federal budget cuts – went into effect March 1. If you’ve been following the news and thinking it will only affect federal employees facing a furlough, you may be wrong.
In the video below, Money Talks News founder Stacy Johnson offers a list of delays, annoyances, and other sequester related problems you could be facing this summer. Check it out, then read on for more surprises.
There’s no way to know with certainty the exact effects budget cuts will have on the Columbia SC economy. And the sequester is highly politicized, so there’s likely exaggeration on both sides.
Whether all, or any, of these sequester-related hassles come to pass will continue to be a matter of debate. Time will tell.
In the meantime, what do you think? Is the sequester going to cause real problems like those described in the video, or do you welcome the cuts and think the warnings are nothing but political posturing? Sound off below.
The Columbia SC housing recovery is expected to be the primary driver of the Columbia SC economy this year.
Homebuilding activity will likely remain the strongest growing component of the economy in 2013, followed by consumer spending, increased domestic energy production, and stimulus from the Federal Reserve.
Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low mortgage rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the Columbia SC housing market.
There’s a lot of pent-up demand for Columbia SC housing, and very little supply. As demand continues to improve, home builders have nothing to sell. They’ll have to build. Growth in building will mean adding not just construction jobs, but also manufacturing jobs building the appliances and furniture needed in the new homes, which in turn drives overall consumption higher.
Economists say the tight supply and renewed demand for Columbia SC housing should lead to higher home values — about a 3.7% increase is anticipated.
But even with the bullish outlook on Columbia SC housing, economists are still forecasting only a modest rise in the overall economy this year. The consensus estimate is for economic growth of about 2.4% in 2013, only a modest improvement from the 2012 growth rate of about 2% they’re forecasting when the final numbers are in.
The biggest concern economists have is a standoff on Capitol Hill. About three-quarters of those surveyed recently picked Congressional gridlock — which could result in a cutback in federal spending — as the biggest problem facing the U.S. economy.
What do you think? Do you think Columbia SC housing is going to be the leading driver of the Columbia SC economy this year? Or will another driver take control? We’d love to hear your opinion. Just leave your comment below.
It’s hard to believe, but these days, we pay for many things that used to be free. And you don’t need to be all that old to remember a lot of these “once free” things that we pay for today.
Are there any other things you can think of that used to be free that we now pay for? We’d love to hear what you can add to the list Stacy just mentioned in the video. Use the comment box to sound off.