Student Loans & Home Ownership
At the beginning of February, National Public Radio (NPR) released a story detailing how heavy student loan debt is keeping millennials from purchasing homes. With national student loan debt doubling to $1.5 trillion over the past decade, this is not altogether surprising. Do you feel like you’re part of this contingent? Have your student loans prevented you from taking the plunge into homeownership? You’re not alone
The homeownership rate for young people age 24-32 dropped almost 10 percent between 2005 and 2014. The Federal Reserve estimates that roughly 20 percent of that decline is due solely to student loan debt.
This can be attributed to the fact that millennials are going to school later, staying in longer, or waiting to get married until later in life than their parents or grandparents. In past generations (namely, Baby Boomers), the average age of homeownership was only 25. Today, the average age increases by nearly a decade.
Don’t be discouraged!
But have no fear! While student loan debt is definitely a barrier, it’s not a complete road block. Many economists say that these younger generations will eventually be able to buy, it just takes a little longer.
“It’s not that they’re not going to buy homes. It’s just that they’ll purchase these homes later in life,” says Odeta Kushi, deputy chief economist at real estate research firm First American. “This generation will still yield the wealth benefits from becoming a homeowner, which I think is the key point,” she says.
It would appear that the winds are already changing. In the past two years, the rates of homeownership among the younger age block has already started to climb. This can be attributed to those with degrees finding their higher paying jobs and being, “buoyed by stronger incomes and employment,” says Jonathan Spader, a researcher at Harvard University’s Joint Center for Housing Studies.
Don’t let student loan payments scare you away from achieving your dream of homeownership. If you have questions about the pros and cons of buying a home, or if you’re wondering if it’s something that is within reach, definitely make an appointment to speak with a licensed real estate agent!
As we always say, the right time to buy a home is the right time to buy a home. Whether you’re 25 or 55, stick to the timeline that works best for YOU!