One of the biggest driving forces behind strong housing market growth is the first-time buyer segment. This group often includes young adults and individuals fresh out of college, looking to buy real estate and pay off student loan debt at the same time.
But, unfortunately for many, that is a task that is too tough to handle. According to a report from John Burns Real Estate Consulting, LLC, high student loan debt will cost the industry 8 percent in sales in 2014. That is equivalent to 414,000 lost deals thanks to this factor, or $83 billion in volume.
For the purpose of this research, John Burns Real Estate Consulting analyzed only U.S. adults under the age of 40, and found that student loan debt has surged from $241 billion to $1.1 trillion over the past 11 years. Out of the 16.8 million households dealing with this financial factor, 5.9 million pay at least $250 per month in student loan bills. Naturally, that takes away from the amount they can dedicate to residential financing.
Some markets remain affordable
While student loan debt is an issue for many buyers, a report from RealtyTrac has found that many of this country's housing markets are still affordable, even for recent college graduates.
In the study, RealtyTrac explained that 96 percent of U.S. markets have homes that are within the price range of those with student loan debt, calculated by looking at median household income. However, a higher monthly income is needed in order to afford the median-priced home per market.
"Contrary to much rampant speculation that student loan debt is holding back homeownership among recent graduates, we found that the vast majority of markets are affordable for recent graduates making the median household income - even many of those recent graduates with student loans," said Daren Blomquist, vice president at RealtyTrac.
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