Debt Depression

A forthcoming Federal Reserve report will quantify how student debt impacts homeownership rates among adults aged 24 to 32 years old, further clarifying previous studies showing a negative relationship between that debt, which recently topped $1.5 trillion, and either a delay in homebuying or forgoing it altogether among Millennials.

The Fed’s preliminary findings show that student loan debt doubled between 2005 and 2014, and accounted for about one-fifth of the 9 percent drop in the homeownership rate among young adults during that time. In 2014, says the Fed, such debt prevented more than 400,000 otherwise financially able Millennials from buying a home and resulted in less access to credit, hindering mortgage financing.

Builders targeting Millennials may consider incentive programs that repay, discount, or forgive student loan debt and/or offer in-house mortgage loans to relieve financial pressures and help pave the way to a home purchase.

Related studies:

• National Association of Realtors
• Brookings Institution
• Harvard University Joint Center for Housing Studies

• This story originally appeared in the April 2019 issue of Professional Builder magazine. See the print version of this article here.