Student debt keeps 51% of borrowers from buying a home

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  • The National Association of Realtors found that 51% of student loan borrowers delayed buying a home.
  • Of this group, 60% of millennials have pushed back homeownership – the group most affected.
  • Millennials, who went through two housing crises before turning 40, are now entering the peak age of buying a home with too much debt.
  • See more stories on the Insider business page.

This white fence continues to move further and further away from millennials, who feel chained to rental life because of student debt.

More than half (51%) of borrowers delay buying a home because of their student loan debt, according to one report the National Association of Realtors (NAR) released on Tuesday. The survey, conducted by Morning Consult, surveyed 1,995 student loan holders and found that of the 51% who had to delay homeownership due to student debt, 60% are millennials – “by far” the most affected group, the report noted.

“Besides just buying a home, this report reveals that more than half of people with student loan debt
delayed some form of major life choice, ”Charlie Oppler, CEO of Prominent Properties Sotheby’s International, said in a statement. “Student loan debt doesn’t just seep into housing affordability. It also affects other aspects of people’s lives. “

Other key findings of the report include:

  • 36% of borrowers said student debt delayed their decision to leave a family member’s home, with 52% of black borrowers saying the same;
  • 31% of millennials would use the extra money to buy a home in the future without student debt;
  • And 28% of black borrowers would use the extra funds to buy a home in the future without student debt.

Insider has previously reported on the relationship between homeownership and student debt, and how the desire to own a home has been delayed indefinitely due to the growing student debt crisis. In June, Department of Housing and Urban Development secretary Marcia Fudge told Axios that student debt is a barrier to home ownership, especially for black borrowers.

“Who has student debt? The poor, the blacks, the browns,” Fudge said. “We are the people who carry the most debt. And so the system is already skewed in that we are not creditworthy.”

The millennial struggle for home ownership

As the NAR report notes, student debt is the biggest barrier to homeownership for millennials. In 2019, the 15.1 million borrowers aged 25 to 34 – a large portion of the Millennial population – owed an average of $ 33,000, which kept many of them from making big purchases in life, like a house.

“I still couldn’t save enough to put down a down payment on a house and commit to another 30-year loan,” Daniela Capparelli, a graduate with $ 150,000 in debt, told Insider in early 2020. , when she was 35 years old. “I often feel like I already have a mortgage without the house.”

It doesn’t help that the housing market continually messes up the generation. They were the ones who suffered the most from the latest housing crisis, entering a dismal job market in the midst of a

recession
which has led to years of stagnant wages. The lingering effects of the financial crisis meant it took them years to build up wealth and save for a down payment, while juggling student debt.

In 2020, the generation has finally entered the homeownership era, with more savings under its belt and lower interest rates that have made housing more accessible – in theory. But high demand for homes in the age of remote work, coupled with the pandemic, under-construction of homes and a shortage of lumber, has created a fierce market with tight stocks and sky-high prices. . Millennials quickly found themselves facing their second housing crisis in a dozen years.

Part of the reason why so many lawmakers and politicians are calling on President Joe Biden to write off student debt is the domino effect of Millennials’ economic woes. So far, he has written off $ 9.5 billion in student debt for targeted groups of people, but has yet to deliver on his campaign pledge to write off $ 10,000 in student debt per borrower. If he doesn’t, millennials will continue to face financial hardship.


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