Student loans are a nuisance to many across the country - and they may be effecting the real estate market as well.
Student loan debt is crippling the bank accounts of numerous former students across the United States. As many as 83% of people aged 22-35, who are still paying off their student loans, haven’t been able to purchase a home yet.
Student loan rates rise with every undergraduate/graduate school year calendar, and the interest begins to accumulate as soon as students graduate from their universities. This, combined with the fact that many students are not employed directly out of college, is hindering the ability for people in this situation to be able to make achieve common milestones, such as purchasing a home.
This could potentially be part of the low market at the moment, as many people are not in the financial situation to be purchasing homes at the moment – and the ever-increasing price of school and student loans may be partly to blame.
According to Student Loan Hero, the average student loan borrower owes more than $30,000 to their accredited university, and 45 million people in the United States overall carry some amount of student loan debt from their time at school. According to the National Association of Realtors, approximately 1/5 of student loan borrowers owe more than $100,000.
The Federal Reserve states that for every 10% that a person owes in student loan debt, the probability of them purchasing a home within the first 5 years after graduating from school drops 1-2% – that’s a lot, if you take into consideration how much the average borrower owes.
This negatively impacts the real estate market, and it may be a long period of time before these student loan borrowers are in a position to purchase a home. We are hoping that the market begins to look more welcoming to potential buyers within the very near future, but even then some people may not be fiscally able purchase. If there is ever a lull in home sales, keep in mind that student loans are a large factor for many people in making the decision not to buy.