the New York Federal Reserve just came out and reported that the default rate on student debt has skyrocketed to 15% and that we're about to see 9 million borrowers of student loans have their credit scores crushed now this comes after 5 years where the US government said to student loan borrowers that they didn't have to pay their student loan interest however now borrowers of student loans are required to pay and if they don't pay it's going to be reported to the credit ratings agencies the New York Fed is estimating that if someone had a 760 credit score and is one of the 9 million people in default their credit score could drop to 590 and if your credit score drops to 590 you have really no chance of buying a house with a mortgage at a reasonable rate you have really no chance of buying a car at a reasonable interest rate and if this access to credit and capital is reduced for enough people in the economy at once it could slow borrowing and economic growth now people with student debt in America actually tend to be higher income than people who didn't go to college around half of all borrowers with student debt make over $100,000 a year so this isn't simply a segment uh that doesn't have financial means there's actually a lot of people in America with decent jobs making decent money who have a lot of student debt that they're struggling to pay and so I think there could be a knock-on effect that's bigger than people think in the economy as far as slowing consumer spending and slowing home purchase demand from the fact that now the payments for student debt are required and that the credit scores are going to drop and what's alarming to me folks is that even prior to this home prices were already dropping in a lot of parts of America i'm here south of Nashville Tennessee in a town called Spring Hill about 30 minutes south of Nashville and the town home behind me is owned by Openoor they're a big Wall Street home buyer and seller and they've cut the price on this house from $400,000 down to $325,000 and Openoro actually acquired this home for $384 grand in late 2023 and now it's on the market for 326,000 so Open Door the big Wall Street home buyer is taking a $60,000 loss on this house open Door is taking losses on homes in many parts of America and actually their losses are starting to drag down the value of other homes in communities like this i'm going to show you another listing up the road here where the seller is also taking a loss but the thing to remember folks is that values are actually starting to drop in the housing market in many different parts of America you know it started in Florida it started in Texas last year and it's now spreading to other parts of the Southeast and other pal parts of the Mountain West we're even seeing values start to edge down now in California and this is all happening with the US government trying its hardest over the last 5 years to prevent a downturn because not only did they um make it so you didn't have to pay your student loans during the pandemic and that your credit score wouldn't be impacted they also made it so you couldn't get foreclosed on during the pandemic they banned foreclosures and the mortgage officers today are bragging about the fact that 8 million foreclosures were prevented during the pandemic and so the government did everything they could the last 5 years to prevent this downturn from happening but now uh it's becoming obvious that it is going to happen it's actually happening in real time now folks here's another house in this neighborhood where the price is dropping the seller of this house originally listed it for 420,000 they've cut it down to 360,000 you could see they tried to rent it out for a while they couldn't rent it out now it's sitting vacant on the market for 15 months and so the values here in this neighborhood in Spring Hill Tennessee they're dropping and the inventory is rising the inventory levels according to data on Reventure app are up as much as 20 to 50% year-over-year depending on the neighborhood and zip code you go to so when you see that rising inventory on the housing market everyone that's telling you that there's some potential distress brewing the listings are going up more than they were last year here in Nashville Redfin is reporting that new listings are up over double digits year-over-year while pending sales are down 5 to 7% year-over-year so think about that more sellers coming to market fewer buyers buying more and more inventory building on the market it but folks I actually want to give you some more details about this student loan situation because I think there might be some of you out there who are maybe unsure of where you stand on your student loans and interest payments and now more important than ever you should and so what happened during the pandemic was that between March 2020 and September 2023 the government lowered the interest rate on student loans to zero so no one with student loans from the government paid interest in that 3 and 1/2 year period because there was no interest collected then starting in September 2023 they got rid of that interest started to get charged again however the government and the Biden administration gave a one-year leeway window before they started reporting missed payments to the credit rating agencies and I think what some people maybe mistakenly thought who had student debt was that just because in the three and a half years during the pandemic you didn't have to pay that you wouldn't have to ever pay again and then because there was the year lag between when it got reported to the credit agencies it seemed like maybe it wasn't a big deal so now there's 9 million borrowers of student loans estimated by the New York Fed we don't know the exact number but that's what the Fed estimates 9 million borrowers of student debt who are delinquent is what they estimate 15% and I'm just curious how many of those people actually even know that they need to pay and that their credit uh scores are about to get hit because what's now happening is that moratorium on the credit reporting ended in September 2024 and then there was basically a three to four month lag between that ending and the Department of Education reporting it to the credit agencies so as we speak now it's being reported to the credit agencies and the next federal debt report we get from the New York Fed is going to show I believe credit score is beginning to tank now folks I want you to check this out i just went a couple blocks over and guess what I found i found another house that Open Door is selling interestingly their sign has been knocked off unlike all these houses i don't know why but this house Open Door bought for 372,000 in February now they've relisted it for 430,000 so immediately a month after buying it Open Door increased the price 70,000 what's even more interesting though is this house was on the market previously for 440 it went pending at 440 opened dooror bought it for 70,000 below pending turns around and then relists it at what the previous list price was like how does that make any sense and why is Open Door buying and owning so many houses in this zip code there's another house a block over that Open also owns as well three homes in like a three or four block radius that Open Door is buying and selling again they're actually America's largest home buyer and seller they're what's called an I buyer they buy the home and then they immediately try to flip the home and they make a fee on buying the home from the seller and sometimes they try to make a profit like here other times they lose money like over there but if you live in a neighborhood where a company like Open Door is really active that's almost got to scare you a little bit because when these Wall Street firms come in and they buy and sell and buy and sell that can destabilize the local market and it could start to make the home values here contingent on something that's not the fundamental demand but rather capital inflows in and out and I think that's something that is is kind of unsettling to me because when I see these neighborhoods that the Wall Street investors invade and then sometimes leave they can cause prices to go way up and then cause prices to go way down but now I want to talk about student debt a little more everyone because this is a big crisis the student debt crisis 1.8 trillion in overall student debt 45 million people in America holding student debt and a lot of them are having trouble finding jobs but if we actually look at the data those with a college degree still do much better in terms of income potential than those without a college degree according to the BLS if you have a bachelor's degree your typical weekly earnings for a full-time job are $1,530 a month roughly and that's 77,000 a year for having a bachelor's degree in the US median earnings comparatively if you have a high school diploma your weekly earnings are around $900 a month and your annual annualized earnings are 46,000 so just on average you make $30,000 more a year if you have a bachelor's degree and so for a lot of people they're still saying to themselves it's worth it for me to go to college and take on this debt however I just have to wonder whether this is going to change into the future with the shifts we're seeing with AI the white collar job recession we're seeing and then all the big layoffs in the US government and I also am left scratching my head about how for five years this government was allowing people to not pay interest on student loans because the pandemic's been over for forever and we just keep seeing all these instances still in 2025 of the overhang of all the pandemic relief still courarssing through the economy i mean if you go to the New York Federal Reserve debt report you can see that the default rate for student loans is listed right now at 0% it's literally listed at 0% but the actual default rate is 15% according to New York Fed analysis we don't know for sure what the default rate is yet but they looked at some private label student loans and found that the private label student loans defaults have gone up to 15 so they're summizing that the government student loan defaults are also going to go up to 15% but like think about the reporting right on the economy and the reporting on consumer default rates was all assuming a 0% student loan default rate when it's actually 15 and I just wonder how many other instances we're going to see in the next 6 months of the overhang of the COVID pandemic stimulus still being in the economy and then running out you know because we're all going to suddenly see you know the credit the credit scores of those who missed the student loan payments the 9 million they're going to drop by a lot they're going to drop by as much as 150 points which is sad i mean it's actually sad because some people took out this student debt and maybe they didn't finish college maybe they weren't able to earn more money and now they're stuck and they can't afford the payments and they don't see a path to getting out from under them and so I I do I do fear that this is going to cause some issues in the economy this year but you know what's interesting folks as I continue to walk around this neighborhood there's so many interesting things in this neighborhood it's one of the most fascinating neighborhoods I've walked through um these houses behind me are actually for rent if you look on Zillow there's like four or five rentals right here around 2,200 a month 2,300 a month now there's no signs that say they're for rent but a bunch of houses here are listed for rent and I'm actually seeing more and more of this on the housing market i'm seeing in some cases that listings are being hidden from the MLS because I'll go to these communities where there's investors or I'll go to home building sites and I'll see on Zillow like oh there's like a handful of listings but then when I get there I'll see in some cases way more listings than are listed in this case it's the opposite they're on Zillow but there are no signs and I'm just seeing kind of more funny business in the housing market right now it seems as if a lot of um sellers and landlords are trying to play games to avoid the inevitable conclusion about what's actually happening in the market is that there is a big slowdown prices are starting to drop and they will likely continue to drop in 2025 if we continue to see this higher inventory on the market especially if we see now for 9 million Americans their credit scores go from 750 to 590 or go from 650 to 500 the New York Fed postulates that the uh economic impact of this will be dependent on how many people uh have higher credit scores that are in default so if there's a sizable amount of the 9 million student debt delinquencies that are of higher credit scores that could have a big impact on the economy uh those borrowers will go from being prime or superprime to subprime if it's mainly people already with lower credit scores the impact on the economy won't be as large those people with lower credit scores already have restricted access to credit probably aren't buying houses probably aren't buying cars in the same way but I still think this is going to be something that's a drag on the economy in 2025 and we just keep seeing these things stack up everyone and now more important than ever you guys need to understand what's going on in your local housing market like the amount of people I talk to who don't know the statistics on is inventory increasing in my zip code or prices going up or down those are things you need to know uh certainly if you're a home buyer or seller investor or realtor but also just like for your own common knowledge uh you're probably going to want to track the housing market in your area just to know what's going on and to do that I created a tool for you guys it's called Reventure App you probably heard me talk about it before but what's really exciting is we've now launched a mobile application in the app stores so you can download this mobile application create a free account and instantly see home value growth data and inventory data for every zip code in America so you very quickly can hit the current location button on Reventure app or type in your zip code and you could see is inventory going up or down are home prices growing up or down uh grounding yourself in that knowledge is really important for fundamentally understanding what's going on in your neighborhood and also if you're making a real estate purchase decision you're going to want to know that definitely so you can make a more educated one on the Reventure Mobile app we have two plans one is free that free plan gets you eight free data points home value home value growth inventory inventory growth population median income rental rates while the premium plan gets you access to our home price forecast score and 40 other premium data points they're going to help you understand the housing market download the Reventure mobile application right now so you can become more informed about what's going on in your backyard