The common refrain is that millennials are spending all of their money on avocado toast, which means they can’t afford to buy a home. Right?
Yeah, not so much. While millennial spending habits may be a contributing factor, their inability to buy a home can also be blamed on a lack of savings, rising student loan and credit card debt, and homes being unaffordable.
The self-proclaimed “broke” generation is trying to be smarter about the housing market, but it’s difficult for quite a few potential homebuyers.
One issue is student loan debt, which is now the second-highest consumer debt category – behind only mortgage debt – and higher than both credit cards and auto loans, according to a report from Forbes. There are 45 million borrowers who collectively owe more than $1.5 trillion in student loan debt in the U.S.
Borrowers in the class of 2017 owe $28,650 on average, according to the Institute for College Access and Success. That debt load is making it harder for potential buyers to become actual buyers.
In an interview with HousingWire, Odeta Kushi, deputy chief economist at First American Financial, said that student loan payments are about 3% of the average millennials’ income.