Survey: Young Worry Student Debts Bar Them From Owning a Home
NeighborWorks America finds Millennials, women and minorities feel the greatest burden.
The sixth annual NeighborWorks America at Home survey found “a steady and significant” percentage of consumers with student loans worry their debt will affect their ability to achieve homeownership in the future. In addition, there is widespread belief that the mortgage process is complicated, and relatively few consumers know where to find knowledgeable advice about how to qualify for a mortgage and buy a home.
The survey found 36% of respondents knew someone who had delayed buying a home because of student loan debt, up from 29% in 2017’s survey.
“Student loan debt is increasingly becoming more of an issue and barrier to the home buying process,” said Karen Hoskins, acting vice president of homeownership programs and lending at NeighborWorks America in Washington, D.C.
NeighborWorks America’s findings are based on an online panel of 1,000 U.S. adults ages 18 and older conducted in August. It asked questions that revealed the extent to which misinformation about credit and required down payments is affecting home buying aspirations, and how much the burden of student loan debt is delaying homeownership.
Nationally, student loan debt now surpasses $1.5 trillion and comprises 42% of all consumer debt. Millennials are shouldering most of the ballooning student loan debt, which has risen 130% since 2008. Women carry nearly two-thirds of the total, or almost $900 billion.
Meanwhile, Census data shows homeownership rates continued to fall long after the financial collapse of 2008, especially for Millennials.
ATTOM Data Solutions, an analytics company based near Los Angeles, found lenders originated 2.1 million home loans in the second quarter, essentially flat from a year earlier. Among them, FHA loans, considered a proxy for first-time buyers, were down 24%.
FHA loans accounted for just 10.2% of second-quarter originations, the lowest since it stood at 7.8% in 2008’s first quarter, and down from 13.5% a year ago and a post-recession high of 21.7% in 2009’s fourth quarter.
This has occurred as home prices and down payments have been rising to record levels in many markets.
The report released Thursday found that only 44% of adults surveyed said where they live is affordable for first-time homebuyers, and 62% said their area’s rent prices are too high for the average person to save to buy a home.
“Student loan debt, particularly among Millennials, is compounding that issue of affordability,” Hoskins said. “It’s perceived as putting homeownership out of reach for some individuals.”
Among those with student loan debts, 85% reported worrying about their debt some, most or all of the time.
The survey also found the student debt burdens are greater for women and minorities:
- 29% of women are burdened with student loan debt, compared to 23% of men.
- 48% of minority women have student loan debt, compared to 22% of white women and 15% of white men.
- 50% of women with student loans worry about the debt all or most of the time.
The perceived complexity of the home buying process might also be dampening enthusiasm for homeownership, despite historically low mortgage rates. Approximately 73% of adults said they strongly or somewhat agree “the home buying process is complicated.”
Nevertheless, homeownership remains a goal for most people and is recognized as a key source of financial stability. The survey found 80% of all adults and 68% of millennials believe owning a home increases financial stability.
NeighborWorks America, or the Neighborhood Reinvestment Corp., is dedicated to providing access to homeownership and safe, affordable rental housing. It also trains staff who work at HUD-approved housing counseling agencies.