Kate Nesterwitz, a marriage and family therapist, at her office in Littleton.

(Ben Markus/CPR News)

Kate Nesterwitz was a teenager when she decided get her bachelor’s and master’s degrees at a couple of East Coast private schools to be a family therapist.

What she failed to consider was how that decision would affect her life as an adult.

“I just tried to get pre-approved for a mortgage, and did not,” Nesterwitz said, “because of my student loans.” She was just 1 percent away from the  required debt-to-income ratio to quality. “That was heartbreaking.”

Nesterwitz and her partner graduated with well over $100,000 in combined student debt, and together they pay that down by about $2,000 a month.

“If you rack that up over time, that’s certainly a down payment on a house,” said Nesterwitz. “I find the most disturbing part to be when I do my taxes, and see the interest that gets paid every year. Last year I paid $6,000 in interest.”

Nesterwitz has cobbled together three jobs to earn extra income and she’s leaving her non-profit family therapy job for private practice, hoping to earn even more.

'Squeezed On All Fronts'

The dilemma for young professionals like Nesterwitz is the longer they’re kept out of the housing market, the more they fall behind.

“As the home values rise much faster than income, they feel frustrated," said Lawrence Yun, chief economist with the National Association of Realtors who has studied this issue with recent surveys. “Even as they are renting, the rents are rising. So they feel squeezed on all fronts.”

In the Denver metro area, home prices are up 48 percent in the last five years, according to the S&P Case Shiller Home Price index. And surveys done in part by the University of Denver show apartment rents are also up 50 percent over the same period from $914 to $1,371.

Yun sees a new and different housing crisis developing, this time characterized by young people carrying record levels of student debt making it hard for them to qualify for a loan. Perhaps not surprisingly, home ownership for people under 35 is at historic lows, just 34.1 percent, according to the Census Bureau.

“Fewer [young] people are participating, and this is one of the contributors of wealth inequality that is developing in the country,” warns Yun.

Homeownership is a key wealth-generating investment for the average American family.

Yun said National Association for Realtors surveys show there’s a psychological barrier as well. Half of people under 35 with student debt say they aren’t comfortable taking on a mortgage, whether or not they would qualify.

'Never A Perfect World'

But not everyone agrees this is such a bleak housing market. Charles Roberts, a long time real estate agent in Denver who runs Your Castle Real Estate, said every housing market is tough for some segment of buyers.

“It’s never a perfect world, and there are always winner and losers and victims,” said Roberts. “I prefer the [market] one we have today to the one seven or eight years ago where every other person was losing their home it seemed like.”

Roberts said it’s not new that people under 35 have trouble pre-qualifying, adding that young people have always had relatively low levels of homeownership. He also points out that’s not necessarily a bad thing.

During the recession, buyers, saddled with debt or low incomes, were getting mortgages they shouldn’t have, touching off a crisis that brought the global economy to its knees.

Roberts said people like Kate Nesterwitz are doing the right thing: continuing to pay down their debt and pursuing higher-paying work.

“The good news is that we expect a lot more of these young people to be able to buy in the future as they get better jobs,” said Roberts.

Still, Nesterwitz, who just turned 30, isn’t keen on waiting. She’s even delaying having kids with her partner because of a lack of housing security and because of her debt.

“With so much instability and so much following you, like a dark cloud, it never goes away.”

She’s only lived in Colorado for a couple of years, and like some young families along the Front Range the allure of cheaper places to live has become more enticing.

“We have a bunch of friends who live in Iowa, or these middle states, where I would not want to land. I don’t want to leave this area, but it feels like you need to be upper-middle class to live here,” Nesterwitz said.