America’s young adults are sitting on at least $1.5 trillion worth of student loan debt. With such an outstanding balance, it’s no surprise that many are struggling to become first-time home buyers.
A recent survey from Clever Real Estate, an online real estate marketplace, indicates that although 84% of Millennials believe homeownership is part of the “American Dream,” a whopping 48% of undergraduates are putting off buying a home because of their loans.
In order to calculate this total, the company surveyed 1,000 current undergraduate students about how debt is impacting their financial decisions.
According to Clever’s findings, student loan debt has had such a significant impact on young adults that many are hesitant to even enter the market.
“Americans agree that 28 is the ideal age to buy a home; however, the median college graduate with student debt doesn’t expect to be able to afford a home until age 35,” Clever writes. “In contrast, students with no student debt plan to buy a home by age 30. This delay has a significant impact on the housing market because college graduates want to buy homes.”
And although the demand may be high, the survey claims that debt-burdened students are now delaying homeownership by an average of seven years.
“According to a recent Federal Reserve study, a $1,000 increase in student loan debt lowers the homeownership rate by about 1.5%, equivalent to an average delay of about 2.5 months in attaining homeownership,” Clever writes. “For the average college debt holder with $37,000 in debt, that ends up being about a 7.7-year delay in their path homeownership.”
While student loan debt is largely attributed for this delay, Clever notes that the nation’s tight labor market is also a huge deterrence to homeownership.
“[Millennials] are certainly starting off at a disadvantage relative to previous generations, and a lot of the scrutiny of Millennials is really misplaced given the disadvantages they’ve had in terms of their costs of education and poor labor market upon entry,” University of Pennsylvania Professor Benjamin Keys said in a statement regarding the report.
These disadvantages have led those determined to own a home with less than stellar options, as a report from LendingTree revealed that 88% of homebuyers grappling with student loan debt are now more likely to consider purchasing a “fixer-upper” home.
“Buyers paying off a student loan balance are more likely to consider purchasing a fixer-upper house than those with other kinds of debt, including personal loans, auto loans and credit cards,” LendingTree writes. “More than a quarter of homebuyers without debt don’t want to purchase a home that requires significant renovations or repairs.”
