Student-loan debt could indeed be keeping more young adults from buying a home of their own, according to an analysis posted on Tuesday.
While both 30-year-olds with and without student loans have retreated from the housing market, homeownership rates have declined more for those with histories of student debt. And that’s a notable reversal from the norm, according to an analysis posted on the Federal Reserve Bank of New York’s Liberty Street Economics blog, using data from the FRBNY Consumer Credit Panel.
“Prior to the most recent recession, homeownership rates were substantially higher for thirty-year-olds with a history of student debt than for those without. This pre-recession pattern is typically explained by the fact that student debt holders have higher levels of education on average, and hence, higher income potential,” wrote authors Meta Brown, Sydnee Caldwell and Sarah Sutherland. “Simply put, these more educated, often higher-earning, consumers were more likely to buy homes by the age of thirty.”
That changed in 2012. That year marked the first time in a decade that 30-year-olds with no history of student loans were more likely to have a mortgage than those who did take on student loan debt, the researchers found. And 30-year-olds with student debt were still less likely to have bought a home in 2013—even though the housing market, in general, showed marked improvements.
Average total debt for student borrowers rose to $30,227 in 2013, from $29,872 in 2012, according to the report. Meanwhile, the debt of nonstudent borrowers continued to decline in 2013.
Of course, it’s likely that student-loan debt isn’t the only thing keeping young consumers on the sidelines. Limited access to credit, lowered expectations for future earnings and cultural shifts that have young adults deferring home purchases could all play a role, the authors concluded.
“Whatever the cause of student borrowers’ reticence, the housing market rebound of 2013 appears to have proceeded without the help of this skilled set of young buyers,” they wrote in the post.
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