Remarks of Secretary Julián Castro
National Association of Realtors Regulatory Issues Forum -
"The Impact of Student Debt on Housing Choices"
Washington, DC
May 10, 2016

As prepared for delivery

Good morning, everyone! Hello, Realtors! Thank you, Tom, for that kind introduction and for your leadership.

It's great to be back with the nation's "Voice for Real Estate."

Real estate plays such an integral role in our economy. But I don't have to tell y'all that it's about much more than GDP growth and quarterly investment figures.

At its most basic, real estate is about dreams coming true. It's about milestones being reached. It's about new chapters and new beginnings for folks at every stage of their lives.

And the passion and expertise that each of you brings to your work is at the heart of those American success stories. So thank you for being a voice for your industry, as well as a friend to so many families looking to secure their piece of the American Dream.

The prescription for achieving that dream is the same today as it's always been: Working hard, saving your money, and investing in yourself, often by getting a great education.

What's changed is that the third step - getting a great education - is more expensive than ever. The rising cost of college, graduate school, and professional training programs, coupled with the aftershocks of the most painful economic recession in generations, has made it harder for many people to make their investment pay off.

Today about 40 million Americans carry some student debt. And 70 percent of students graduate with debt.

People have been borrowing to finance their education for generations. I certainly couldn't have afforded to attend college without the Pell grants, Perkins loans, and federal work-study programs that brought my dream within reach.

But what we're seeing today is different. The Institute for College Access and Success recently reported that from 2004 to 2014, students' average debt at graduation jumped 56 percent. And as the NAR's Generational Survey shows, the high cost of college is an issue that affects more than just recent graduates.

While a majority of millennials say student debt is the number one reason why they're putting off buying a home, it's the generation before them and their parents who're shouldering a heavier load of school-related debt.

It's become such a major concern, it's helped fuel a role reversal for many families.

A recent study showed that 20 percent of millennials provide some financial support to their parents. One young man who was profiled on CNBC bought a home for his parents instead of buying a home for his own family.

He and his spouse had been spending $1,500 a month helping his parents, so they decided to buy a house instead and funnel that money toward monthly mortgage payments that were going toward an asset.

Now that the young man has finished paying off his MBA loans, he says he's saving for a down payment on his own home. The good news is that he's not alone.

Over the past seven years, President Obama's policies and a growing economy have boosted average Americans' bottom lines - and recent trends in student loans are showing encouraging signs of progress.

Just last month, the Department of Education reported that after rising for several years, default rates among recent graduates are falling. Among borrowers who began repaying their student loans in 2012, the three-year default rate was down nearly 3 percent from its 15-point peak in 2010.

Student loan delinquencies have also fallen. And unemployment and economic hardship deferments have declined dramatically.

This is all the result of a job market that's growing stronger every day. Our economy has created more than 14.5 million jobs over 74 straight months - the longest streak of private-sector job growth in history.

Average hourly earnings for American workers are up, more Americans are entering the workforce, and the unemployment rate is at 5 percent, just about the lowest it's been at any point since the Great Recession.

I'm happy to say that the housing market is a major part of our nation's overall economic strength.

Real residential investment has grown by more than 8 percent for six straight quarters, highlighting the housing sector's solid, steady recovery. In fact, growth in residential investment has substantially outpaced growth in overall GDP.

I'm proud that HUD has helped lead this turnaround. We've taken a number of steps to ensure that our housing market remains a bright spot in the economy.

That includes making it more affordable for folks to purchase a home.

To date, 1.3 million families have taken advantage of our decision to cut FHA mortgage insurance premiums. In 2015 alone, the FHA endorsed more than 753,000 home loans - up 27 percent from the year before.

And a majority of these loans are being secured by first-time homebuyers - more than 80 percent of FHA-insured mortgages this past February went to folks opening the door to their first home. It's just one reason we're working so hard to expand HUD's housing counseling network so that buyers, especially first-time and first-generation homebuyers, have the support they need to navigate what can be a daunting process.

And when those buyers are ready, they need a credit market that works for them. That's why we've also made it easier for lenders to do business with HUD.

As part of our "Blueprint for Access" initiative, for example, we've overhauled our "Single Family Housing Policy Handbook," improving the compliance process and bringing together over 900 mortgagee letters into a single document. And because one of the best ways to help Americans save for that first home is by making sure they can find a rental home that fits within their budget, HUD is investing in affordable housing.

We're partnering with local and state government leaders so that they use federal housing resources in a more focused way. We're also expanding a program that helps builders of Low-Income Housing Tax Credit projects get those projects approved faster. And we're directly investing in affordable housing creation through the new National Housing Trust Fund.

So our economy is growing, our housing sector is strong, and American graduates are showing that they're better able to manage their student debt. It's encouraging news, but it's not enough. We know we can do better and, with your help, we will.

Today, I'm happy to announce that we're moving forward on a rule change that's going to make it easier for folks to buy one of the most attractive options for young professionals and retirees: Condominiums.

HUD's Condo Rule is out the door and with OMB. That means we're another step closer to giving more builders, sellers, and buyers the market flexibility they deserve. HUD is also taking action to help more Americans manage their student debt.

As you know, HUD recently lowered the amount of student loan payment that lenders must consider from 2 percent of the homebuyers' outstanding loan balance to 1 percent.

Now that President Obama has outlined a series of measures to support the 40 million Americans who have some student debt, HUD will continue to work with our partners across the Administration and in the housing community to explore additional changes that can help more Americans purchase a home.

Helping more Americans successfully shoulder their student debt is certainly important. And it's just as important that we continue investing in an economy that works for the middle class and for folks striving to enter the middle class.

That's exactly what the President's broad agenda for the economy in this 21st century is helping to do.

The President is working to build on the progress of a number of states like California and New York, cities like Seattle and Washington, DC, and companies like Costco and Ben and Jerry's that are raising America's minimum wage.

He's also fighting for the investments that are necessary to prepare more Americans to earn good jobs and higher salaries. That means making college, especially community college, more affordable so that more young people earn degrees without getting burdened with debt.

It means working with businesses to provide apprenticeships and on-the-job training and other paths into the middle class. And it means sharpening our nation's competitive edge so we can keep creating high-wage jobs for those workers to fill.

Workers who will turn to you - our nation's realtors - to help them find just the right houses their families will turn into homes.

The American Dream of homeownership is as strong today as ever. And perhaps the best news of all is that millennials are showing that their generation is just as committed to homeownership as their parents and grandparents.

A TD Bank survey released in April found that nearly 40 percent of millennials will be looking to buy their first home in the next year.

Realtors help make the dream of homeownership for so many Americans a reality.

You're part of our nation's economic backbone. You always have been.

And HUD is committed to partnering with you to ensure that the hard-won progress we're seeing in our housing market continues to grow for many years to come.

Thank you.


Content Archived: February 9, 2018