Ocean City Today
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College debt slows millennials looking for first home buys

Real Estate Report
By Lauren Bunting | Oct 26, 2017

(Oct. 27, 2017) A recent news release from the National Association of Realtors said despite being in the prime years to buy their first home, an overwhelming majority of millennials with student debt currently do not own a home and believe this debt is to blame for what they typically expect to be a seven-year delay from buying.

This information comes from a new joint study on millennial student loan debt released in September by NAR and nonprofit American Student Assistance. The survey additionally revealed student debt is holding back millennials from financial decisions and personal milestones, such as adequately saving for retirement, changing careers, continuing their education, marrying and having children.

NAR and ASA’s new study found only 20 percent of millennial respondents currently own a home, and they are typically carrying a student debt load ($41,200) that surpasses their annual income ($38,800). Most respondents borrowed money to finance their education at a four-year college (79 percent), and slightly over half (51 percent) are repaying a balance of over $40,000.

Among the 80 percent of millennials in the survey who said they do not own a home, 83 percent believe their student loan debt has affected their ability to buy. The median amount of time these millennials expect to be delayed from buying a home is seven years, and overall, 84 percent expect to postpone buying by at least three years.

“The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and other major life decisions,” Lawrence Yun, NAR chief economist, said.

According to Yun, the housing market’s lifecycle is being disrupted by the $1.4 trillion of student debt U.S. households are currently carrying. In addition to softer demand at the entry-level portion of the market, a quarter of current millennial homeowners said their student debt is preventing them from selling their home to buy a new one, either because it’s too expensive to move and upgrade, or because their loans have impacted their credit for a future mortgage.

“Student debt is a reality for the majority of students attending colleges and universities across our country. We cannot allow educational debt to hold back whole generations from the financial milestones that underpin the American Dream, like home ownership,” Jean Eddy, president and CEO at ASA, said.

Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin.

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