Over the last couple of years, we’ve been hearing anecdotes about why young adults aren’t buying homes at the rate we’d normally expect based on historical trends. One of those anecdotes is that young people saddled with student debt are unable to qualify for home loans, thus delaying their entry into homeowner status, but there hasn’t been a lot of data to back that up until now.
The Wall Street Journal has an article about a report from the Federal Reserve Bank of New York showing that student debt is indeed affecting homeownership, although it’s not a large percentage of the overall population:
The report offers a mixed assessment on the effect of student debt on the economy. Student debt, which has more than doubled over the past decade to $1.3 trillion, has risen partly due to an increase in the number of Americans attending college. That has led to higher incomes and, in turn, positioned many Americans to buy homes.
But a significant minority of borrowers are defaulting on their student loans and in turn harming their credit and ability to purchase homes, the report shows.