Millennials and homeownership are two words that are typically at odds. This generation is known to carry a load of student debt that is keeping them from becoming homeowners.
New research shows that millennial renters want to purchase a home, but based on current savings rates, they may need to save up for a decade or longer before they are able to come up with a 20 percent down payment.
So why are millennials not saving?
Apartment List's annual renter survey, which had more than 30,000 responses nationwide, found that millennials are "faced with stagnant incomes and rising home prices, [and] many millennials will be forced to delay homeownership, migrate to more affordable cities, or take on more debt."
According to the report, college-educated millennials with student debt have to save for 10 years to afford a 20 percent down payment, compared to 5 years for those without debt. A total of 58 percent of millennials with college degrees have monthly student loan payments of about $410.
"This is at least partly by choice–millennials with student debt payments spend just as each month as those without, instead of cutting back on discretionary expenses to save more for a home," the report said.
Millennials without a college degree have an even lower chance at homeownership. Apartment List determined that these millennials need at least 15 years to save enough for a 20 percent down payment.
"Faced with rising rents and stagnant incomes, most are not saving enough. They also receive much less financial support from friends and family," the report said. "Nearly all metros across the United States are unaffordable for millennials without a college degree."
"Given that the average millennial in our survey only saved $210 each month towards a down payment, these student debt payments are significant–many college graduates could double or triple their savings each month if they did not have student loans. Doing so would allow them to reduce the time needed to save for a home, putting homeownership within closer reach for more millennials, "Apartment List said.