Buying a new home can be challenging for millennials, especially those with college debt. On Tuesday, October 15, Realtor.com® released a new study showing that the amount of outstanding student debt in the U. S. could purchase the total for-sale housing inventory nearly twice.
The study states the average student loan borrower owes $34,500, $8,500 more than the typical down payment of $26,000. According to the Department of Education, wage growth can’t keep up with tuition increases. The usual public university tuition has grown at four times the rate of the average wage since 1986. This disparity has impacted the student’s ability to buy homes and make other major financial decisions for years to come. A recent NAR report says that 26% of millennials point to student loans as the main reason they can’t save up for a home down payment. A Federal Reserve paper released at the beginning of this year estimated that about 20% of the homeownership decline among young adults could be linked to student debt increases since 2005.
Millennials do want to buy homes; they just may be delayed with their purchases. Earlier in 2020, presidential candidate Elizabeth Warren introduced a proposal to eliminate student debt, at least partially, which could impact when millennials can purchase. An analysis done by Redfin estimates that if Warren's proposal was enacted, which would eliminate up to $50,000 worth of student loan debt for the average American, a borrower could make a down payment on a home three years faster.
If you have questions about buying your first home, call the experts at NASB at 888-661-1982 or click here for more information.
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