NAR: Renters with student debt hesitant on homeownership

Dive Brief:

Although the second-quarter National Association of Realtors HOME survey found that nearly 75% of households believe it's a good time to buy a home, the survey also revealed that approximately 50% of young renters with student loan debt are hesitant to take on a mortgage.
The NAR also found that homeowners (80%) are more optimistic about homeownership than renters (62%), a difference that NAR Chief Economist Lawrence Yun attributes to homeowners' ability to access the equity in their home, while renters still struggle to save for a down payment in the face of ever-increasing rents.
In this environment of high rents, low mortgage rates and growing income, young people should be entering the housing market in greater numbers than they are, but the emotional and financial strain of repaying student loans are causing them to miss out on the benefits of homeownership, according to Yun.

Dive Insight:

Last month, a joint NAR/SALT/American Student Assistance survey found that 71% of those who carried student loan debt considered it a barrier to homeownership. More than 50% of those surveyed responded that the financial burden of student loans would keep them out of the homebuying market for more than five years, and 40% said that debt would keep them from moving out of a family member's home. Not surprisingly, the survey also found that 79% of older millennials (26-35) with $70,000 to $100,000 of debt had the most negative views about their chances of owning a home.

In March, an NAR report found that the baby boomer generation actually carries the most debt, as this group is not only repaying its own student loans but that of their children and other family members as well. The National Association of Home Builders found that student loan debt is one of the reasons the housing market is missing about 2 million young households. The organization said that, in 2014, 8.8 million adults (20%) aged 25 to 34 lived with a family member, up 4.6 million (12%) from 2000. The NAHB maintains that this group represents the estimated 2-million-homeowner hole in the market that homebuilders are missing out on reaching.

Other second-quarter HOME survey findings include:

Less than 50% of surveyed households believe the economy is improving, with those in the West being the most optimistic and those in rural areas having the most negative view.
The Personal Financial Outlook Index fell slightly to 57.7.
In the second quarter, the percentage of homeowners who believe it is a good time to sell is up 5% from the first quarter to 61%.
93% of respondents believe that home prices will stay the same or increase in the next six months.