NAHB Says Student Loan Debt Fueled Housing Slump

Washington, DC, June 22, 2012 -- New analysis of government data by the National Association of Home Builders reveals a connection between rising student loan debt and the onset of the housing slump, the group said.

“The rising student loan debt problem is another consequence of the housing downturn,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla.

"As more and more parents face tighter budget restraints as a result of lower home values, this is forcing an increasing number of students to take out loans for tuition, essentially shifting some of the burden of paying for college from parents to students."

The link between rising student loan debt and the start of the housing crisis comes on the heels of a recent report from the Federal Reserve showing that U.S. household wealth plunged nearly 40 percent from 2007 to 2010 as a result of declining home values.

"Together, these findings should serve as an urgent wake-up call for policymakers to do their part to ensure a full-fledged housing recovery moves forward to restore the balance sheets of tens of millions of home owning families, create jobs and spur economic growth," said Rutenberg.

To get housing back on track and provide the foundation for a long-lasting economic recovery, Rutenberg called on leaders in Washington to provide access to mortgage credit for qualified borrowers; demonstrate their support for the mortgage interest deduction; support affordable downpayments for home buyers; enact reforms in appraisal practices and oversight to ensure that appraisals accurately reflect true market values; and establish a strong housing finance system that retains a federal backstop to ensure that standard 30-year fixed-rate loans and adjustable rate mortgages remain readily available for working class households.