The National Association of REALTORS® (NAR) teamed up with American Student Assistance®’s (ASA’s) SALT® consumer literacy program to conduct a survey of student loan borrowers who are current in repayment. Of the respondents 71% cite student loan debt as the factor delaying them from buying a home.
The U.S. currently has a student debt load of $1.3 trillion, which accounts for 10 percent of all outstanding debt. As the magnitude of student debt continues to rise the homeownership rate falls, especially among young people. Among the respondents 39% owe $30,000 or less, 48% owe between $30,000-$100,000 and 14% owe more than $100,000. Only 55% of student loan borrowers are current in repayment.
Of this group only 18% are homeowners, 78% say they can’t save for a down payment, 63% can’t qualify for a mortgage due to high debt to income ratios, 47% can’t afford to buy their preferred house or neighborhood, and 69% don’t feel financially secure enough to buy a home.
Among homeowners, 31 percent say student debt is impacting their ability to sell an existing home and move up to a different home and 7 percent have problems with their credit caused by student loan debt.
The average delay in buying a home among those with student debt is five years. Those with higher amounts of student loan debt and those with lower incomes expect to be delayed longer.
Forty-two percent of the respondents were delayed in moving out of their family member’s home after college because of student debt. Forty-six percent of younger millennials currently live with family. Twenty-one percent rent with roommates. Seventy-one percent are employed full-time.
According to the National Association of REALTORS® Profile of Home Buyers and Sellers, among recent homebuyers, one-quarter have student loan debt and the typical amount is $25,000. The share of those with student loan debt rises to 41 percent among first-time homebuyers. Even among successful homebuyers, this amount of debt is cited as a difficulty in the home-buying process.
Student loan debt doesn’t only impact the housing market. Sixty-six percent of respondents said their student loan debt effected their ability to take a vacation, and 57% said it effected their ability to purchase a car.
An experienced Real Estate Agent and Loan Officer can provide advice on how much home you can afford.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to email@example.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.