I’ll bet many of you have children or grandchildren who have accumulated student debt in hopes of securing that career they worked so hard to obtain. The good news is that job prospects are increasing as the economy recovers. The not so good news is that student debt is delaying their home ownership! According to a new joint survey conducted by the National Association of Realtors and SALT (a consumer literacy program), results revealed that student debt postponed four in 10 borrowers from moving out of a family member’s household after graduating college. Nearly three-quarters of non-homeowners polled in the survey believe their student loan debt is delaying them from buying a home.
According to the NAR survey, the percent of student debt owed is highest among older millennials ages 26-35 (79 percent) who have amassed $70,000-$100,000 in debt. Forty-three percent of those polled had between $10,000-$40,000 in student debt, while 38 percent had $50,000 or more. The common debt was $20,000-$30,000. Most polled feel this debt will delay their home purchase by 5 years!
I believe legislation in the near future will be at the forefront of our representatives to effect a change in debt payment structure so that these future homeowners will be able to pursue their first home, verses living with family. A solid real estate market always starts with first-time buyers and then branches out to repeat buyers. It is critical to our future that these young college graduates are able to save for their first home and purchase earlier in their lives.
First-time buyers who are able to purchase today are also challenged by a shortage of housing. This is driving up prices making it even more difficult for our young people entering the housing market. Prices are rising in most areas due to this lack of inventory. My experience has shown me that the market can change on a dime and what seems like a trend can alter in an instant. We are blessed to have low interest rates which is good news for our first time buyers. But for future long-term stability, our millennial generation must be able to secure an education without the burden of student debt curtailing their opportunity to purchase their starter home.
My hope is that we have balance and stability in our real estate market which means finding a way to educate our young people without the crushing debt of a college education. Balance is always a good thing for any aspect of life. It is important that our students have some skin in the game, but not so much that home ownership is put off into the distance. This delay also directly affects when families form and when they leave their parent’s and grandparent’s homes. We have always found a way to make homeownership a center piece for our American dream. I have confidence a solution will occur so that our children and grandchildren can buy their first home in their 20’s, not into their mid and upper 30’s! Our future is now. I have complete faith that our real estate market will be solid for years to come with some give and take from those who lead our country.