Buying a home once was a rite of passage. Once you got married, you moved out of your apartment and bought a “starter home.” Today’s household-forming generation, the Millennials, is facing obstacles their parents never did.
Jessica Lautz, managing director of survey research at the National Association of Realtors (NAR), points to student loan debt, flat wages, rising home prices and rising rents as headwinds that are keeping Millennials out of the housing market.
Rising rents and escalating home prices provide a double whammy. While many young people might like to buy a home, expensive rent makes it harder to save for a down payment. It’s true that mortgage rates are as low as they’ve ever been, but that doesn’t help when you can’t come up with the down payment.
Speaking at an NAR event, Sen. Elizabeth Warren (D-MA) said seven out of ten college graduates had to go into debt to earn degrees and left school with payments that almost amount to a mortgage.
Crushing student debt
“Student debt is crushing young people, it’s hurting the nation’s economy and delaying the opportunity for many to buy their first home,” said Warren.
She cited NAR data on the percent share of first-time buyers remaining at its lowest point in nearly three decades. Each month, she said, money that could go toward a down payment on a house goes instead to pay off student loans.
But with all the financial obstacles, Lautz says the median age of first-time buyers has remained relatively unchanged at 31. She says that means people are ready to buy ñ it’s just getting more difficult to do so.