Student Loans and Home Ownership: Not What You Expect!
Conventional wisdom says that high student loan debt prevents debtors from buying homes. This creates a ripple effect; owners of starter homes are stuck because potential home buyers sit on the sidelines, which means that owners of move-up homes are stuck because owners of starter homes cannot sell them, which means that that owners of third and fourth homes are stuck…
Or maybe conventional wisdom isn’t correct.
Take a look at this article. “Student Loans Don’t Deter Buyers” is great news for everybody! In a nutshell, student loan debt is not stopping home ownership. A study found that a couple in their 30s without student loan debt and at least one Bachelors Degree has a 70% chance of owning a home. The same couple with $30,000 in student loan debt has a 68% chance of owning a home. At least one Master’s degree and $50,000 in student loans give the couple a 75% chance of home ownership. More student loan debt, so long as it’s combined with greater education, actually improves the likelihood of home ownership! The problem comes with debt but no degree. Couples with $30,000 in student loan debt but no degree only have a 40% chance of home ownership.
I do have some observations and questions. First, the study is of people in their 30s. It doesn’t speak to those in their 20s, those who generally have the highest educational debt loads. Second, the study doesn’t break down the likelihood of homeownership by degree. For example, is there a difference between highly paid Engineering and Scientific degree holders and those with lesser paid Arts and Humanities degrees? Did the study equally assess degrees or was it heavy with certain types of degree holders? Finally, the study did not consider technical and trade school graduates including those in highly compensated trades like plumbing, electrical, etc. Surely these highly paid non-degree holders make the trend even more positive.
Still, this is great news. While there may be a housing delay due to debt, young buyers are still buying! This is not only positive for sellers of starter homes, but for sellers everywhere on the home sales food chain.
If you want to talk more about what it takes to get a buyer to purchase your house, please let me know! I will be happy to help.