Student Loan Debt Curbs Housing Market by $83 billion

There’s been lots of debate lately in housing circles about the impact of student debt on home ownerp.

Now there’s a new study out that attempts to put a number on that impact: 414,000.

That’s how many home sales will not happen this year because of high levels of student loan debt, according to a report from John Burns Consulting, an Irvine-based firm that advises home builders. That’s equal to about 8% of all home sales, and enough to dent the housing industry by $83 billion a year.

The report estimates that the number of households under age 40 that owe $250 or more each month in student loans has nearly tripled since 2005, to 5.9 million. And it projects that every $250 in monthly student loan payments decreases home borrowing and purchasing power by $44,000. Figure a typical sale price of $200,000, throw all that together, and you get $83 billion in lost sales.
“We actually think it’s pretty conservative,” said Rick Palacios, director of research at John Burns Consulting. “We’re only looking at people age 20 to 40. We know there’s a big chunk of households over age 40 who have student debt, too.”

The report is the latest in a growing pile of research that links rising student debt levels – overall student loan debt has nearly tripled since 2005 to $1.1 trillion – with sluggish home sales, especially among young adults…

Continue Reading at the Los Angeles Times…

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