A costly college diploma could be costing millennials the other American dream: owning a home.
A new study conducted by Apartment List found that debt from student loans is having a big impact on the ability for college graduates to buy a home.
They surveyed roughly 11,000 people across the country and they found those with student debt were saving significantly less for a down payment compared to those without debt. But, those without a college degree are saving even less.
Some highlights directly from the study:
- Since 1980, the median income has grown 25 percent, while the median home price has grown 60 percent and the average cost of undergraduate tuition has increased by 160 percent
- The average college graduate without student loans has $13,900 saved for a down payment, compared to $6,500 for college grads with debt, and just $3,400 for those without a college degree
- It would take an estimated 7.6 years for the average college grad without debt to save enough for a 20 percent down payment on a condo, compared to 11.9 years for college grads with debt, and 16.7 years for those without a college degree
Lewis said he was not surprised by this study at all. He also said there is another struggle the market as a whole is facing: inventory. There are just not enough homes going on the market, therefore creating an affordability issue, as well.
"The National Association of Realtors has been working with Congress to try and get... some things worked out as far as student loan limits; some of those kinds of things," Lewis explained. "We worked really hard to get the FHA loans limit raised because of affordability."
Lewis said he does not believe this is impacting millennials and their want to own, just that they may own later in life.
"This is still an option for them," Lewis said. "They are not the first generation ever to have debt going into the home-buying process and I think it's important for them to understand that. I think it's so important for millennials to understand that rates are still at historic lows."
Lewis also said that rent is so high in some places, that buying may actually be a better option.
He suggests meeting with a loan officer, then chat with a realtor who can go over what could be a reality for your situation.