Home prices are rising, but student debt isn’t falling, and it’s having a very real effect on the housing market. Weaker traffic at open houses and reluctance to take on a mortgage is manifesting as millennials worry about their student debt burdens.
A new study from the National Association of REALTORS shows that while 75% of Americans still think it’s a good time to buy a house, about half of those surveyed who also had student loan debt said that they were uncomfortable taking on a mortgage.
In the survey, about 62% of current renters said that they thought that now was a good time to buy, which is down from 68% last quarter, in December 2015.
NAR’s chief economist, Lawrence Yun, said that the survey highlights the ongoing gap in confidence between current homeowners and current renters: “Existing-home prices surpassed their all-time peak this spring and have climbed on average over 5 percent nationally through the first five months of the year and even faster in areas with severe supply shortages,” he said.
Yun went to explain that, “Most homeowners appear to realize that if they’re ready to sell, they’ll likely find a buyer rather quickly and be able to use the sizable equity they’ve accumulated in recent years towards their next home purchase. Meanwhile, renters interested in buying continue to face minimal choices, strong competition and home prices growing faster than their incomes.”
The national student loan burden doesn’t just affect potential home buyers — statistics have shown that about 15,000 of bankruptcies every year are caused by student loan burden. As millennials age and more of them enter the home market, the true price of their loans on the national housing economy may become apparent.