Student debt impacting homeownership

Student loans are weighing non-homeowners down.

Nearly three-quarters of potential homeowners said their student loan debt is preventing them from purchasing a home, and half said they expect to be delayed at least five years from homebuying, thanks to their student loans. Nearly half, 40 percent, said they delayed moving out of their family’s home after receiving their college degree, according to a recent survey by NAR and SALT®.

Overall, the student loan debt is spread across generations, as more than 50 percent of those who do not own a home in each generation are attributing their lack of purchasing to student loan debt. The majority are in debt $20,000 to $30,000 from college. However, not surprisingly, of those suffering the most consequences from student loan debt, 79 percent are millennials aged 26 to 35, along with those $70,000 to $100,000 in debt.

“A majority of non-homeowners in the survey earning over $50,000 a year – which is above the median U.S. qualifying income needed to buy a single-family home – reported that student debt is hurting their ability to save for a down payment,” said Lawrence Yun, NAR chief economist. “Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase.”

More than 75 percent of survey respondents, including 80 percent of millennials, said they can’t afford a down payment, which is delaying their ability to purchase. Even if they were able to afford a down payment, 63 percent said they do not qualify for a mortgage, thanks to their debt.

However, student loan debt isn’t only impacting non-homeowners. NAR said that 31 percent of current homeowners are not putting their homes on the market, due to student debt. Eighteen percent of those said it’s too pricey to move and upgrade, while 7 percent have credit problems, thanks to student loans, and 6 percent are struggling to pay more than the minimum payment on their mortgage.

“It is imperative to the nation’s economy that we find immediate and practical solutions to financially empower the 43 million Americans with student debt,” said SALT® President John Zurick.