Dive Brief:
- A Zillow analysis of PSID Data released Thursday bucked the conventional narrative of the effects of student loans on homeownership, finding that debt has little impact on the chances people buy a home — as long as they graduated.
- The analysis revealed the odds of a married couple, with at least one child, who carry no student debt owning a home is 69.8%, if at least one has a bachelor's degree. The odds of a similar couple with $30,000 in student debt owning a home is only slightly lower, at 67.7%.
- People who have student debt but never obtained their degree are the least likely to become homeowners. The analysis found the odds of a married couple with $30,000 in student debt and no degree of owning a home is only 40%.
Dive Insight:
Regardless of debt, having a bachelor's, master's or doctorate degree raises the odds people will become homeowners. As expected, graduates with advanced degrees have the highest odds of buying homes, despite their larger loans.
Zillow's analysis contradicts other claims that student debt is a major hindrance to homeownership. It doesn't contradict, however, the fact that debt can delay people from buying homes.
"Student debt isn't the evil-doer it's made out to be, at least not when it comes to homeownership. As long as students stay in school and get a degree, student debt doesn't deter them from homeownership, although it is possible that student debt could delay homeownership," Zillow Chief Economist Svenja Gudell said.
Zillow's report could be good news for builders, who continue to wait for younger buyers to become homeowners, rather than remain renters.
