At the beginning of 2016, the home ownership rate for those 30 and under sat at about 27.7%, the lowest it has been in decades.
On the other hand, student loan debt rose to $1.2 trillion, though it has already surpassed the $1.3 trillion mark earlier this year. In a development which should surprise nobody, there seems to be a pretty clear correlation between the growing student loan debt Americans hold and the under 30 home ownership rate.
It isn’t too far of a stretch to see the percentage hit the 25% mark within the next couple of years.
Between 2005 and 2015, those under 30 went from owning their home at about a 34.5% rate down to 27.7%. Over the same decade, we went from owing $350 billion in student loans to over $1.3 trillion by the end of the first half of 2016. It’s likely that graduates coming out of school with a significant amount of debt are putting on buying homes out of necessity, at least for several years after they are done with college.
Other factors likely to blame in the stagnant millennial housing market include –
- Lack of affordable housing – Younger crowds tend to prefer denser metro areas where renting is the norm and listing prices are high.
- Poor credit scores – Only about 2% of millennials have excellent credit scores (though you can get approved for most home loans with anything over about 720)
- Negative credit history – About 50% of millennials do not know their credit score and even less know what is in their credit report. You can check both at Credit Sesame.