Boston’s high prices keep home ownership out of reach for Millennials
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Student loan debt, currently estimated at 1.56 trillion is still impacting Millennial homebuyers according to a recent report from Bankrate.com. According to the report “31 percent of Americans say they currently have or have had student loan debt stemming from their own education.” It goes on to reveal, “an additional 13 percent of American adults financed another family member’s school expenses through student loans.” People responding to Banknote’s survey, 31% report they have delayed homeownership.
No matter how many possible solutions are tossed around Washington and beyond on reducing the crushing burden of student loan debt, it remains one of the top reasons Millennials (23-38) are putting off buying a home. Compare the numbers to their baby boomer parents with only 15% of them who delayed buying a home because of student loan debt. Consider that 39% of the respondents earn an annual income of $80,000 and over.
Bankrate.com’s Senior Economic Analyst Mark Hamrick based in Washington sees it this way. “When we look across the landscape, potential home buyers are among those most adversely affected. When we receive data from the Federal reserve showing student loan debt at over $1.5 trillion, we find it important to connect the dots and see how and where it’s impacting individuals.”
For Millennials who have settled in areas like Boston, New York, Washington DC, Los Angeles or San Francisco, even without crushing monthly student loan debt payment, there’s a good chance they are simply priced out of the home buying market.
Rochester, New York offers affordability to Millenials
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Michael Pulver, senior vice president residential mortgage manager at Genesee Regional Bank in Rochester, New York sees some light emerging from this very dark tunnel. “What we have been seeing is an increase in the number of Millennials who do want to move from renting to buying. There are now some better programs out there with minimized down payment requirements –less than 3% down. This increases the affordability to be able to get into a home for that Millennial buyer. Here in upstate New York affordability is good.” Consider a current listing price of $127,900 for a 1,454 square foot colonial with hardwood floors and “updated kitchen.”
Rick Ross, longtime college educational financing consultant has some insightful thoughts on the subject. “There have been lots of conversations on how people can pay off student loan debt. Washington is looking at changes that could put Millennials in a better situation.” Ross is talking about there being only one government income-based repayment plan versus the current five with possible loan forgiveness of the remaining balance after 120 payments are made or approximately 10 years. “If you could see the end of your student loan debt at age 32, you could then really see a way to dip your toes in home ownership,” Ross explains.
Whether anything gets done about this in Washington or just becomes another political football to toss about during the next presidential campaign remains to be seen.