Millennials have long been in the shadow of overwhelming student loan debt, and a new paper seeks to shine light on how it has impacted their homebuying behavior
A forthcoming Federal Reserve report will quantify how student debt impacts homeownership rates among adults aged 24 to 32 years old, further clarifying previous studies showing a negative relationship between that debt, which recently topped $1.5 trillion, and either a delay in homebuying or forgoing it altogether among Millennials.
The Fed’s preliminary findings show that student loan debt doubled between 2005 and 2014, and accounted for about one-fifth of the 9 percent drop in the homeownership rate among young adults during that time. In 2014, says the Fed, such debt prevented more than 400,000 otherwise financially able Millennials from buying a home and resulted in less access to credit, hindering mortgage financing.
Builders targeting Millennials may consider incentive programs that repay, discount, or forgive student loan debt and/or offer in-house mortgage loans to relieve financial pressures and help pave the way to a home purchase.
- National Association of Realtors
- Brookings Institution
- Harvard University Joint Center for Housing Studies