Student Debt Reduces Buyers’ Budgets by Nearly $100,000

Carrying student debt, whether for themselves or someone else, limits potential home buyers’ budgets by $92,440, leaving fewer homes on the market they can afford.

The average monthly student debt payment for renters who plan to buy a home in the next year is $388, according to the Zillow® Housing Aspirations Report. The maximum priced home a buyer with student debt could afford is $269,400, if they spend no more than 30 percent of their income on combined housing and student debt. At this price point, they could buy 52.3 percent of homes currently listed for sale.

For a buyer with no student debt seeking to spend the same share of income, the buying limit would increase to $361,800, and they could afford to buy 66.4 percent of available homes nationwide.

 

Student debt reached record levels this year, with the total amount at $1.56 trillion in the third quarter of 2018. Paying off student loans also makes it harder to set aside money for a down payment, which is one of the top barriers to homeownership. And saving for that down payment takes longer than it did for previous generations.

“Higher education pays off when it comes to lifetime earnings and the long-term odds of homeownership, but carrying any kind of debt limits how much home buyers can afford. For today’s generation of young home buyers, who came of age in a period of rapidly rising education costs, student debt payments can delay the pace of down payment savings and put a dent in their max price point once they do decide to buy,” said Zillow Senior Economist Aaron Terrazas. “With for-sale supply still tightest for the most affordable homes but increasingly available at higher prices, even a small reduction in a buyer’s target price point can result in substantially fewer options.”

Nationwide, about one third (33.9 percent) of renters who are planning to buy a home in the next year have some form of student debt, whether it is for themselves or someone else.

Metropolitan Area Max Home
Price,
Average
Student
Debt
Share of
Listings
Affordable
with
Student
Debt
Max
Home
Price, No
Student
Debt
Share of
Listings
Affordable,
No Student
Debt
Median Home
Value,
September
2018
United States $ 269,400 52.3% $ 361,800 66.4% $ 220,100
New York, NY $ 357,300 29.4% $ 449,700 40.9% $ 431,000
Los Angeles-Long Beach-
Anaheim, CA
$ 326,700 6.3% $ 419,200 13.5% $ 647,100
Chicago, IL $ 320,500 58.8% $ 413,000 71.9% $ 222,200
Dallas-Fort Worth, TX $ 308,700 45.0% $ 401,100 64.0% $ 233,200
Philadelphia, PA $ 320,500 68.6% $ 413,000 79.3% $ 229,300
Houston, TX $ 292,200 48.1% $ 384,600 65.3% $ 200,900
Washington, DC $ 507,600 62.0% $ 600,000 71.1% $ 401,000
Miami-Fort Lauderdale, FL $ 227,900 21.4% $ 320,300 38.3% $ 278,400
Atlanta, GA $ 300,400 52.3% $ 392,800 66.8% $ 209,700
Boston, MA $ 423,500 38.1% $ 515,900 51.0% $ 458,000
San Francisco, CA $ 528,000 16.4% $ 620,500 26.0% $ 961,200
Detroit, MI $ 257,900 62.0% $ 350,400 76.1% $ 157,200
Riverside, CA $ 276,000 29.0% $ 368,400 49.4% $ 362,000
Phoenix, AZ $ 276,700 40.3% $ 369,100 60.5% $ 258,300
Seattle, WA $ 410,100 33.8% $ 502,500 48.5% $ 486,600
Minneapolis-St Paul, MN $ 365,800 60.7% $ 458,200 73.3% $ 263,300
San Diego, CA $ 357,800 9.7% $ 450,300 20.2% $ 589,200
St. Louis, MO $ 281,300 73.3% $ 373,800 82.9% $ 163,100
Tampa, FL $ 227,900 43.9% $ 320,300 65.4% $ 208,400
Baltimore, MD $ 392,500 67.2% $ 484,900 77.0% $ 265,600
Denver, CO $ 365,800 32.0% $ 458,300 50.6% $ 398,400
Pittsburgh, PA $ 260,300 72.6% $ 352,700 82.7% $ 142,300
Portland, OR $ 345,800 26.2% $ 438,200 46.8% $ 391,400
Charlotte, NC $ 286,400 44.4% $ 378,800 62.5% $ 199,400
Sacramento, CA $ 313,900 24.3% $ 406,400 44.5% $ 400,600
San Antonio, TX $ 259,300 54.4% $ 351,800 71.5% $ 187,800
Orlando, FL $ 235,800 34.7% $ 328,200 59.0% $ 231,000
Cincinnati, OH $ 284,800 66.1% $ 377,200 78.8% $ 164,500
Cleveland, OH $ 232,600 69.8% $ 325,000 81.9% $ 142,700
Kansas City, MO $ 291,900 61.8% $ 384,400 76.3% $ 185,500
Las Vegas, NV $ 251,400 29.3% $ 343,900 57.0% $ 273,800
Columbus, OH $ 284,500 58.4% $ 376,900 71.0% $ 184,200
Indianapolis, IN $ 263,400 63.3% $ 355,900 76.6% $ 157,200
San Jose, CA $ 610,800 11.7% $ 703,200 18.3% $ 1,288,700
Austin, TX $ 356,800 52.5% $ 449,300 66.7% $ 300,600

3 Comments on "Student Debt Reduces Buyers’ Budgets by Nearly $100,000"

  1. Simple solution; End Government backed student loans.

  2. Ditto the comment preceding.

  3. Evil One’s comment is right on. However, so many young people would miss out on the opportunity to go into debt with little hope of repaying it due to bogus courses of study and furthermore, they would also miss out on indoctrination into the authoritarian Leftist political creed of their “professors”.

Leave a comment

Your email address will not be published.


*