July 11, 2023 | Driving It Home with ABoR's Housing Economist

On June 30, the Supreme Court rejected the Biden administration’s student loan forgiveness plan, which would have canceled over $400 billion in debt held by tens of millions of borrowers. Under the proposed plan, student loan forgiveness for individuals (households) earning less than $125,000 ($250,000) annually would have been $10,000. Low-income families who received Pell Grants would have seen an additional $10,000, or $20,000 in total, in student loan forgiveness. Student loan debt remains one of the primary constraints to homeownership among first-time and lower-income homebuyers as it generally extends the time to save for a down payment and increases the borrower’s debt-to-income ratio. For a first-time buyer who earns 80% of Austin’s median family income in 2023 ($93,450) and owes the average balance on student loan debt in Texas ($26,273), annual savings are estimated to decline between 17% and 47%, depending on the interest rate of the loan, the remaining loan balance, and the buyer’s saving rate. Overall, last week, housing activity declined on a week-over-week basis due to the Independence Day holiday. Residential sales were down nearly 50% in the Austin-Round Rock-Georgetown MSA, while pending sales dropped nearly 23%. Active and new listings for homes for sale declined 8% and 22%, respectively. Residential leasing activity also declined, but to a lesser extent than that of residential sales. Closed leases were down 32%, while pending leases declined nearly 16%. Active listings for homes for lease ticked down 16%, but new listings for homes for lease rose nearly 7%. Mortgage rates reached a recent high of 6.81% last week (a level unseen since November 2022). The upward revision to first quarter GDP and strong jobs numbers have pushed up the yield on the 10-Year Treasury, with mortgage rates following suit. Don't forget that Dr. Losey will present the Buy vs. Rent Index at the upcoming Central Texas Housing Summit on July 26. Don't miss it–save your spot here: https://www.abor.com/housingsummit Download the Audio Transcript + Episode Summary: https://www.abor.com/content/uploads/2023/07/DIH-7-11-2023.pdf Connect with us on socials: https://www.abor.com/socials Connect with Dr. Clare Losey on LinkedIn: https://www.linkedin.com/in/clare-losey