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Declining home values already impacting teenagers

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MADISON, Wis. (12/31/08)--The recent drop in home values has ripple effects beyond homeowners. The economic crisis also affects teenagers, according to youth educators at the Credit Union National Association. “Teenagers are already affected by the seismic ripple that flows from the plunge in home values,” says Rena Crispin, managing editor, Googolplex. And as painful as it’s been, it could get worse. Although home values nationally have dropped an average of 19% from their peak in 2000, they still haven’t reached their traditional relationship to household income, according to a USA TODAY analysis of home prices since 1950. Recent analyses from that same source indicate home prices still would have to fall another 17%. How does this affect teenagers?
* Tight job market with a lot of competition; * Scarcity of student loans and grants; * Clamped-down car loans; and * Increased cost of living.
If home values drop to their 1950s’ relationship to income (three times income), "we'll need another bailout of banks similar to what we just did," says Susan Wachter, professor of real estate at the University of Pennsylvania. Include teenagers in your serious talks about finances. They are mature enough to anticipate and solve financial problems. Let them know that home prices will affect them and provide the reasons. Here’s how you can help them survive:
* Re-visit the discussion about your student’s career path as well as a supportive part-time job while in high school. * Weigh the advantages and disadvantages of enrolling in advanced placement (AP) classes. AP classes can save hundreds because they allow students to apply test scores toward college credit. “The catch is that if the student doesn’t attain a high enough score, there will be no credit awarded,” says Bridget Widdowson, sophomore at Robert E. Cook Honors College at the Indiana University of Pennsylvania. * Encourage your high school student to take a money management class either at school or through your credit union, and get armed with sound financial information. * Help your student create a savings plan for a used car. Find out how your credit union can help. * Re-evaluate college choices and costs--consider junior colleges, work colleges and technical schools. * Research scholarship opportunities and brainstorm new solutions for paying for college. Widdowson advises you “start at and broaden your base with more unconventional scholarship searches.” * Consider enrolling in an apprenticeship program while in high school. Widdowson says that if the goal is to enter the job market after graduation, getting students involved in apprenticeship programs is essential.