2 West Hawaii Real Estate | September 29, 2017 Student Debt Delaying Millennial Homeownership by 7 Years Despite being in the prime years to buy their first home, an overwhelming majority of millennials with student debt currently do not own a home and believe this debt is to blame for what they typically expect to be a seven-year delay from buying. This is according to a new joint study on millennial student loan debt released today by the National Association of Realtors® and nonprofit American Student Assistance®. The survey additionally revealed that student debt is holding back millennials from financial decisions and personal milestones, such as adequately saving for retirement, changing careers, continuing their education, marrying and having children. NAR and ASA’s new study found that only 20 percent of millennial respondents currently own a home, and that they are typically carrying a student debt load ($41,200) that surpasses their annual income ($38,800). Most respondents borrowed money to finance their education at a four-year college (79 percent), and slightly over half (51 percent) are repaying a balance of over $40,000. Among the 80 percent of millennials in the survey who said they do not own a home, 83 percent believe their student loan debt has affected their ability to buy. The median amount of time these millennials expect to be delayed from buying a home is seven years, and overall, 84 percent expect to postpone buying by at least three years. “The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and other major life decisions,” said Lawrence Yun, NAR chief economist. “Sales to first-time buyers have been underwhelming for several years now1, and this survey indicates student debt is a big part of the blame. Even a large majority of older millennials and those with higher incomes say they’re being forced to delay homeownership because they can’t save for a down payment and don’t feel financially secure enough to buy.” According to Yun, the housing market’s lifecycle is being disrupted by the $1.4 trillion of student debt U.S. households are currently carrying2. In addition to softer demand at the entry-level portion of the market, a quarter of current millennial homeowners said their student debt is preventing them from selling their home to buy a new one, either because it’s too expensive to move and upgrade, or because their loans have impacted their credit for a future mortgage. “Millennial homeowners who can’t afford to trade up because of their student debt end up staying put, which slows the turnover in the housing market and exacerbates the low supply levels and affordability pressures for those trying to buy their first home,” added Yun. Repaying student debt is influencing career choices, life milestones and retirement savings In addition to postponing a home purchase, the survey found that student debt is forcing millennials to put aside several additional life choices and financial decisions that contribute to the economy and their overall happiness. Eighty-six percent have made sacrifices in their professional career, including taking a second job, remaining in a position in which they were unhappy, or taking one outside their field. Furthermore, more than half say they are delayed in continuing their education and starting a family, and 41 percent would like to marry but are stalling because of their debt. Vacant Land Loans cŅŞŅĜĹƋŸƵĜƋĘƚŞƋŅƀĂŢĀűĹÏĜĹčúÃà $QQXDO3HUFHQWDJH5DWH:LOOORDQXSWRRIWKHDSSUDLVHGYDOXHRUVDOHVSULFHZKLFKHYHULVOHVV7KUHHDQG¿YH\HDUWHUPVDYDLODEOH $¿QDOEDOORRQSD\PHQWLVGXHDWWKHHQGRIWKHWHUP0RQWKO\SD\PHQWLVFDOFXODWHGXVLQJD\HDUDPRUWLDWLRQ$OOORDQVDUHVXEMHFWWR FUHGLWDSSURYDO5DWHVDQGWHUPVZLOOEHGHWHUPLQHGEDVHGRQLQGLYLGXDOFUHGLWZRUWKLQHVV0DLPXPORDQDPRXQWIRUSURSHUWLHVORFDWHGLQ /DYD+DDUG=RQHVDQGXSWR0XVWEH\HDUVRIDJHWRTXDOLI\IRUDORDQ0XVWEHDPHPEHUWRSDUWLFLSDWH 5HY )HGHUDOO\LQVXUHGE\1&8$ 930-7700 hicommfcu.com 5.25% e{à With rates as low as:
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