loading...

Millennials and Delayed Homeownership: Student Loans or Other Priorities?

by Nena Perry-Brown

Millennials and Delayed Homeownership: Student Loans or Other Priorities?: Figure 1

There has been a lot of speculation about why millennials haven’t been willing or able to enter the housing market, with many signs pointing to the lingering impacts of the 2008 nationwide recession.

Now, ApartmentList has released an analysis on the impact of student loan debt on millennial homeownership. Among their findings was that regardless of whether college-educated millennials are carrying student loan debt or not, this demographic is more focused on discretionary spending than saving for a down payment.

At their current savings rates, it will take college-educated millennials with student loans ten years to save up for a 20 percent down payment. That period of time is cut in half for those with college degrees and no student debt. Millennials without college debt are also much more likely to receive assistance from family or friends to make a down payment than those with student loans.

The report found that millennials who are not college graduates would need at least 15 years to save for a down payment — 19.3 years if attempting to purchase a home in DC.

Nationwide, 58 percent of millennials with college degrees are repaying an average of $410 toward their student loans every month. In DC, 52 percent of millennials with college degrees also have student loans in repayment, and nearly half pay at least $300 each month.

As for saving, college graduates without student loan debt put $320 of their monthly income toward a down payment, $90 more than graduates with student loans. While it follows that college graduates would be able to save significantly more if loan debt was out of the picture, college grads with or without debt spend comparable portions of income on activities like travel, shopping and dining out.

This article originally published at https://dc.urbanturf.com/articles/blog/millennials_and_delayed_homeownership_student_loans_or_other_priorities/11264

3 Comments

  1. jess wilkie said at 1:09 am on Tuesday May 24, 2016:
    My last two clients have been millennials pretty fresh out of school. Student loan debt was an issue and almost deal-killer for both of them on their financing. This issue is echoed with the attendees of my buy-vs-rent seminars. The crisis is real and these young adults have a pretty tough obstacle to overcome with student debt.
  1. Logan said at 3:45 pm on Tuesday May 24, 2016:
    Student loan debt is a problem for many, for sure, but can we stop pretending buying a home is a "must" and that taking on a mortgage means you are a successful person. There is nothing wrong with renting. Especially as a millennial in your 20s. I'm nearly 40 and just bought for the first time. Live cheaply, have roommates and make larger payments on student loans than what is required. It is possible even with a lot of student loan debt to get it paid off with discipline. Without the discipline, I'm not sure someone should be taking on a mortgage in the first place. Despite what some promise you, things are not free.
  1. throwsatfeet said at 6:34 pm on Tuesday May 24, 2016:
    Student loans aren't the problem, it's the savings rate. Spending 40% of your take home pay on a luxury apartment and another 50% at bars and restaurants doesn't make a lot of sense. What's the point of working in an office 50-60 hours per week if you aren't saving any money? They'd be better off living with Mom and Dad and working part time jobs.

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!