In 2017, millennials finally entered the housing market in force, comprising 71 percent of first-time buyers and 42 percent of all buyers who purchased a home in the last year. Despite driving much of buyer demand and activity, this group of 18- to 37-year-olds still faces a number of roadblocks on their way to homeownership — namely student loan debt and rising home prices.
According to a recent study by Apartment List, since 1980 the median home value has jumped by 60 percent and the average cost of undergraduate tuition has grown by 160 percent. Meanwhile, wages have only grown by 25 percent, leaving millennials to struggle with juggling inadequate income, ballooning student loan debt and skyrocketing home prices.
Recent college graduates have an average of $34,000 of debt — a 70 percent increase from 2005. But on average, these graduates are only making 57 percent more than those with a high school degree.
On average, and taking into account expected down payment assistance from family, recent college graduates (those surveyed were renters between the ages of 22 and 35) with student debt are managing to save $6,500 toward a down payment on a home — double the amount of high school grads ($3,400) and half the amount of college graduates with no debt ($13,900).
At that rate of saving, Apartment List found it will take college graduates with no debt 7.9 years to save a 20-percent down payment for a median-priced condo. For college graduates with debt and those without a college degree, it will take 11.9 and 16.7 years to save, respectively.
“In other words, a 25-year-old who did not attend college would not have enough saved for a down payment until she is 42; assuming a 30-year mortgage, she would be paying off her home loan into her 70s,” the report…