Report: Student Debt to Drive 2014 Home Sales Down 8%

Going against recent assertions that student debt may not prove as big a hindrance to the housing market as feared, a new report from researchers at John Burns Real Estate Consulting argues that student loans could cost the industry tens of billions of dollars this year alone.

In a note to clients last week, researchers Rick Palacios Jr. and Ali Wolf at John Burns Real Estate estimate that 414,000 potential real estate transactions will be lost this year as the national student debt continues to balloon past the $1.1 trillion mark.

Looking at Americans between the ages of 29 and 39, the researchers estimate that 29 million—more than a quarter of that population—have at least some student debt, translating into an estimated 16.8 million burdened households.

Out of those households, 5.9 million pay more than $250 per month, "which inhibits at least $44,000 per year in mortgage capability for each of them," Palacios and Wolf said.

Factoring in previous academic findings, the pair estimate that the resulting decline in purchasing power could mean an 8 percent drop in home sales through all of 2014, or 414,000 fewer transactions—meaning $83 billion in lost volume, assuming a typical purchase price of $200,000.

What's more, the researchers say their estimate is a conservative one, as they only examined Americans under 40.

Also of note is the fact that the report doesn't take into account other factors that have made the housing market less friendly to entry-level buyers, including the uneven rise in housing supply that has favored the upper price tier of the market.

"While we applaud the increasing education, we need to realize that it comes with a cost known as student debt," Palacios and Wolf concluded. "We raised the red flag on student debt back in 2011 and continue to believe that this debt will delay homeownership for many, or at least require that they buy a less expensive home."