A new survey from the National Association of Realtors and the SALT Program of American Student Assistance finds that a large majority of young people with student debt feel prohibited from buying a house because of the burden of loan repayments.
The two groups polled 3,000 people making on-time payments for student loans about their current attitudes toward the housing market. Some 69% said they didn’t feel financially secure enough to buy a home, and 80% found it difficult to save for a down payment because of monthly loan payments.
“A majority of non-homeowners in the survey earning over $50,000 a year — which is above the median U.S. qualifying income needed to buy a single-family home — reported that student debt is hurting their ability to save for a down payment,” NAR chief economist Lawrence Yun told CNBC. “Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase.”
Debt payments can affect credit scores, too. According to the Home Loan Learning Center, most mortgage lenders require a minimum credit score of 680 to qualify for a non-FHA loan. Only 34% of people under age 35 are homeowners today, a significant decrease from the 44% at the height of the housing market boom.
“Americans are concerned about this widening [wealth] inequality,” Yun said. “One of the contributors is that the homeownership rate is at a 50-year low. For most middle-class families, they have always perceived housing equity as their main source of wealth building. But fewer people are participating in home ownership, particularly among the younger generation, and that is tied to student debt, at least according to our survey.”
Of the participants polled, 38% owed $50,000 or more in student debt. Regardless of changes to the housing market itself, more than half of survey respondents said they anticipated their aversion to home-buying to continue for at least another five years.