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Student Loans and High Rent Prices Weigh on Homeownership

  • Published: 2016-10-17 : Author: NeighborWorks America : Contact: neighborworks.org
  • Synopsis: New survey from NeighborWorks America shows how student loans and high rent prices weigh on homeownership.

Quote: "Rising home prices and rents are especially affecting student loan holders who want to be homeowners."

Main Document

Student loan debt and high rent prices continue to worsen the homeownership outlook according to data from the fourth annual housing survey from NeighborWorks America.

The national telephone survey found nearly one-third (30 percent) of Americans know someone who has delayed the purchase of a home because of student loan debt, up from 28 percent in 2015 and just 24 percent in 2014.

More than half (53 percent) of potential home buyers with student loan debt said the debt was somewhat or very much an obstacle to buying a home, down slightly from 57 percent in 2015, but above the 49 percent rate in 2014.

Meanwhile, 56 percent of people said that rents are too high where they live to save enough to purchase a home.

"With the homeownership rate at the lowest point in decades, and minority homeownership plunging even further, these data signal a weak home buying market going forward, despite near record-low mortgage rates and broad-based national income growth," said Paul Weech, president and CEO of NeighborWorks America.

Rising home prices and rents are especially affecting student loan holders who want to be homeowners. When asked about their next housing choice given current market conditions, 29 percent of people with student debt said they expect to rent again, while only 17 percent of people without student debt said their next move would be to rent.

Nearly 60 percent of renters wish that their next housing move would be into homeownership.

Housing affordability weighs on homeownership

Americans are split on housing affordability in their own neighborhoods. Forty-five percent of those polled agree that homes in their market are unaffordable to first time homebuyers, while 50 percent say that homes are affordable. But while there is nearly an even split about affordability, rental costs clearly are an obstacle to homeownership. Fifty-six percent of people agree that rents in their area are too high for a person to save for a future home, and just 37 percent disagree.

Better awareness of down payment assistance programs and student loan debt counseling could help affordability. For example, the survey found that 71 percent of Americans are not aware of or unsure about the down payment assistance open to middle class homebuyers, up slightly from 67 percent in 2015. In addition, 77 percent of those with student debt never heard or are not familiar with loan counseling programs from nonprofits.

These programs could help a consumer manage their student debt and provide information about down payment assistance programs that could increase the possibility of qualifying and obtaining affordable and sustainable homeownership.

In August, NeighborWorks America launched a new training program that will help housing counselors educate consumers on a range of student loan debt issues, including provide information on safe debt consolidation, and how having student loan payments does or does not affect qualifying for a mortgage.

Widmeyer Communications, a Finn Partners Company, conducted the national representative survey among 1,000 U.S. adults using a random digit dial (RDD) sample. The survey has a margin of error of +/- 3.1 percentage points at a 95 percent confidence level.

NeighborWorks America

For more than 35 years, NeighborWorks America, a national, nonpartisan nonprofit, has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $27.2 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

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