Property Shark and AptList recently released their own survey results about the homeownership hopes and dreams of young people. The survey results conducted by each entity agreed…the majority of respondents (80%) expects to buy a house over the next 5 year time period.
Specifically, 87% of Millennials (born 1981-1994) want to buy a home and 83% of Gen Z-ers (born1995-1999) want to buy. The problem? 48% of these combined demographic groups have NO money saved for a down payment.
Both demographic groups in these two discreet studies said that the main reason they have no money for a down payment is that they have staggering student debt. According to the authors of the AptList survey, “Student debt is keeping homeownership out of reach…We estimate that the 23% of college graduates without student debt can save enough for a down payment within the next five years compared to just 6% of college graduates who are currently paying off student loans.”
According to authors of the Property Shark survey, “Young people who aspire to own their own place have been locked into the rental market for longer than previous generations. Millennials may be the largest category of home buyers, but 50% of Americans born between 1980-1995 still rent.”
Both of these survey results are corroborated by the 2017 Federal Reserve Bank of New York’s study on student loan debt. This Fed Reserve study showed that student debt loan has ballooned by 170% over the last decade. Just compare the payment schedules below:
- In 2005, student loan payments were $227?month.
- In 2016, student loan payments were $393/month.
Currently, the average college undergraduate borrower has approximately $34,000 in student loans.
Almost 20% of these young prospects intend to rely on financial assistance from their families in order to become homeowners. For Millennials earning $100,000 or more, AptList found that they expect to receive more than $50,000 in financial assistance from their families for a down payment.
Jd Ross, co-founder and now advisor to OpenDoor, describes student loan debt as the “debt engine for Americans in their 20’s and 30’s. In previous generations, you were at least starting from zero. But today, Millennials are starting out in the negative…” thanks to student loan debt.