America’s collective college debt eclipses every home listing in the nation, according to a new realtor.com® report.
Adding It Up
According to data from realtor.com, the average down payment, 10 percent, on a median-priced property, $260,000, totals $26,000—$8,500 less than the average college loan obligation, $34,500.
The bigger picture: The amount of college debt, $1.5 trillion, exceeds every for-sale home’s worth, at $780 billion.
“Student debt has ballooned to an all-time high as the price of education continues to outpace wage growth, and this is holding back many potential buyers from being able to purchase a home,” George Ratiu, senior economist at realtor.com, says.
The biggest burdens for buyers? Look to Washington, D.C., where the average college debt is $52,581; Maryland, where the average is $39,028; and Georgia, where the average is $37,206, according to the report. On the opposite side? North Dakota ($25,940), Wyoming ($27,484) and Iowa ($27,458).
College debt has hindered homebuyers, especially millennials, who account for 34 percent of all borrowers and whose debt totals $498 billion. As a generation, their average balance is $33,000, compared to an $11,400 down payment (median).
The affordability challenge is motivating them to move, Ratiu says, especially to the Midwest and South, where there are jobs and more practically priced properties. In fact, both are home to five of the country’s 10 hottest zip codes, according to another realtor.com report.
“On the real estate front, the affordability crisis in major cities is driving young families to more affordable Midwestern and Southern markets, where savings for a down payment stretch much further and can turn owning a home from a future dream into today’s reality.”
Earlier this year, a National Association of REALTORS® report found that 61 percent of millennials believe college debt is keeping them from owning. In a more recent report, Zillow found that 24 percent of buyers were denied a mortgage as a result of their student loans.
“Student debt is already impacting borrowers’ ability to buy a home and education debt is expected to hamper consumers’ financial decisions for many years down the road,” Ratiu says. “The important implication of rising debt is that young generations are delaying major life decisions.”
For more information, please visit www.realtor.com.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.
Hi Suzanne,
I believe the title would be more accurately stated as:
College Debt Dwarfs ( date)for sale Housing Market’s Worth.
I wish NAR would do something productive about this massive problem!! The numbers are staggering and when the next generation cannot buy homes, this is a huge threat to our industry. But our “Realtor Champions” are a big part of the problem. Student debt to for profit colleges is a big part of this problem. Lack of support for our public universities, difficult pay-back rules, fewer grant programs for students. And the mess about loan forgivenss for teachers and other public servants. These should be KEY issues for Realtor Champions and they are NOT!!
Isn’t it time for student debt conversations address the educational system’s money grab ever since the federal government backed student loans? What about the immense wealth that colleges have amassed?
My plumber doesn’t have this problem and he’s doing pretty well…….
Employers need to stop requiring candidates to have a college degree for work that doesn’t require one. They are perpetuating the myth that to be successful, one must go to college. Kids, go to trade school or find a good mentor in the business world and work your way to the top… and do it debt free.
Programs will allow those potential homeowners There are other financing programs available with less than the 10% quoted in the article. 3 1/2% and 5% down payment programs will allow them to investment in a home happen sooner.
My advice, don’t go to college, yet. Get a job in the field of your major before spending $100,000 only to find out it’s not what you thought it was. Go to trade school, Go into the military, you’re only 18 years old, what do you know about anything, especially what you want to do for next 45 years of your life? You didn’t know what you wanted to do last year. College is a rip-off, most can’t do anything when they get out. They rely on others to provide training in order to gain the skills required to produce income. Most college professors I have been exposed to are kooks, no real world experience, common sense or logic. How many end up working in the field of their degree. It’s a waste.
Affordable state colleges should be part of a push from high school guidance counselors fir juniors and seniors. I am a Trustee at Ocean County College and we have Kean University on our campus for our students to complete their Bachelor Degree for a total cost of under $25,000. This option is available to students across the country. We need the media to promote this path to our college bound students.