Fed Says Student Debt is Curbing Home Sales for Young People

January 16, 2019

Homeownership for young people has plunged in the past decade, and a new study from the Federal Reserve says that student loan debt may be partly to blame. The study looked at homeownership between 2005 and 2014. While homeownership for all Americans declined in that period, from 69 percent in 2005 to 64 percent in 2014, for those ages 24-32, the percentage had a much steeper drop from 45 to 36.

Though the Fed said that student debt was not the primary cause of the decrease (and did not identify other causes), it did indicate that about 20 percent of the drop could be attributed to student debt. The report notes that this translates to 400,000 individuals who would have been able to purchase a home if not for their student debt during the period studied.

Economists from the fed noted that in the 10-year span they looked at per capita student debt doubled from $5,000 t0 $10,000. The study noted that for every $1,000 per capita increase, there was a 1 to 2 percent drop in home ownership.

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