Student loan debt has doubled in the past decade to the tune of $1.56T and, according to research done by the Federal Reserve, this debt load is cutting into the ability of Millennials to buy a home.

Homeownership rates among those 24-32 year olds have dropped approximately 9% during this most current ten year time period. The Feds estimate that in January 2019, 20% of this homeownership decline was due to student loan debt.

Married Millennials have an average combined debt of $1,200/monthly in student loan bills. According to the Fed’s research, they compare themselves unfavorably with their parents’ generation in terms of being unable to save for a down payment on a home. Baby Boomers, on average, were 25 years old when they bought their first homes. Millennials are waiting almost a decade later to buy theirs.

Will Millennials with student loan debt ever achieve this key homeownership milestone to get a “piece of the American Dream?” According to Odeta Kush, the deputy chief economist with the real estate research firm, First American, ”It’s not that they’re not going to buy homes. It’s just that they’ll purchase these homes later in life.”

Several factors are contributing to this “delay” in Millennial homeownership:

  • Millennials are staying in school longer and some are not finishing school within 6 years…a worst case scenario for non-finishers who have racked up student debt without having the benefit of higher wages that come with college graduation.
  • Millennials are delaying marriage.
  • Millennials are delaying having children.

The upside for Millennials currently, however, is the slowdown in the housing marker. According to Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute, said, “First-time buyers who have been sidelined by the booming market and booming prices will have an opportunity to get in now.” And, “…at least now, Millennials are being buoyed by stronger incomes and employment,” said Jonathan Spader, a researcher at Harvard’s Joint Center for Housing Studies.

All that being said, student loan debt continues to be a headwind for Millennials. For those under 40, the 21st C may feel like one long recession despite a decade of economic growth (for some but not others.) Proof?  Since the century’s start, median net worth has plummeted for every age group under 55 years of age.