Various studies have been conducted to determine how increasing student loan debt is affecting the U.S. homeownership rate. Some estimates report [1] the average student loan debt per individual to be as high as $37,000.
Meanwhile, the U.S. homeownership rate was reported to be 62.9 percent for Q2, the lowest since HUD began tracking the data in 1965.
Against that backdrop, the fourth annual housing survey from nonprofit NeighborWorks America [2] found that more than half (53 percent) of 1,000 individuals surveyed by telephone said that student loan debt is either “somewhat” or “very much” an obstacle to buying a home. This number was actually down from the share in last year’s survey (57 percent) but up from the 2014 survey (49 percent).
A slightly higher share (56 percent) said they were paying too much for rent to save for a down payment on a home, compared to 37 percent who disagree that rents are too high to save for a down payment. But the reason the homeownership rate is so low is not because people are lacking the desire to own a home—60 percent of those surveyed who are renting said they wish that they could own a home next time they move.
“With the homeownership rate at the lowest point in decades, and minority homeownership plunging even further, these data signal a weak home buying market going forward, despite near record-low mortgage rates and broad-based national income growth,” said Paul Weech, president and CEO of NeighborWorks America.
According to the survey, 29 percent of respondents who had student loan debt said they expect to rent next time they move, compared to only 17 percent of those without student loan debt. Those surveyed are divided evenly as to their opinions on affordability; 45 percent said they believe that homes in their neighborhood are unaffordable for first-time homebuyers, compared with 50 percent who say they are affordable.
But the survey also found that many homebuyers are unaware of student loan debt counseling or down payment assistance that could help them. Nearly three-quarters (71 percent) said they were unaware of or unsure about down payment assistance programs that could assist middle-class homebuyers (an increase from 67 percent in last year’s survey). More than three-quarters (77 percent) said they had never heard of or were unfamiliar with student loan debt counseling programs that nonprofits offer.
A recent survey of 1,338 millennials conducted by LendingTree [3] found that more than six in 10 millennials (63 percent) have graduated or will graduate with student loan debt and nearly half (46.5 percent) are still paying off their student loans. Buying a home was the second-most frequently cited event millennials had to delay, with almost half (45.3 percent) saying they had put off buying a home because of student debt obligations (travel was first with 53.3 percent). In a hypothetical situation in which student loan debt were to be absolved, LendingTree found that 41.8 percent of millennials surveyed said the money that previously went to paying student loan debts would go toward buying a home (second behind only saving for emergencies, with 54 percent).