In the last few years, student loan debt has spiked as a topic of discussion in the financial industry. Millions of Americans took out loans to pay for school, only to land in a job that affords them the ability to make ends meet while paying them off — if that — leaving the future a big financial question mark.
One of the huge expenses being pushed off the horizon is owning a house. For millennials, home ownership looks more and more like a pipe dream. It’s not surprising when you consider figures like the national average for student debt being $40,000 per college-educated millennial, or $1.5 trillion total owed in student debt alone.
Luckily, home ownership may not be as far out of reach as this generation may have been led to believe. It’s not unattainable in general; it just may take a little longer than anticipated. In a 2016 study by the Federal Reserve System, it was estimated that for every $1,000 owed in student loans, there was a delay of two and a half months to homeownership.
Based on averages, that’s less than 10 years after college graduation. Whereas older generations, like Gen X, were generally around age 25 when they bought their first home, the millennial generation will be waiting until their mid to late 30s. Even so, it’s been speculated that more than 50% of millennials have asked for help to buy a home, compared to 15% of baby boomers at the same age.
For those who can afford a home, the upkeep and maintenance may price them out of their budget anyway. Or they have resources for a starter home, but no options. Baby boomers and Gen-Xers trend toward staying in their homes for long periods of time, leaving the market full of options that are larger, newer and ultimately more expensive.
As a potential solution to the student loan debt crisis continues to form, it seems likely that we’ll continue to see a generation of renters, at least for the time being. When they do decide to take the leap and buy a home, we can be pretty sure that the millennial generation — those born in the time of online reviews and intense pre-purchase research — will take the time to find the home worth investing in.
Kat’s Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, visit http://communityamerica.com.