Young Adults Are Losing All Hope of Buying a Starter Home

JP Morgan analysts say the rising burden of student loans is making it "even more unsustainable" for young people to buy homes

byAkane Otani
9:50 AM PDT 
March 18, 2015  


Because of a growing mountain of student loan debt, young people will find it harder to buy homes in coming years, JPMorgan analysts say.

The student loan debt burden rose 8 percent, to $1.16 trillion, last year. Most of that debt—65 percent—was owed by borrowers under 40 years old. College tuition has been rising faster than the rate of inflation for decades. The double blow of a younger indebted population and higher college costs means "housing is becoming even more unsustainable for first-time buyers," the analysts said in a note.
"Student loan debt continues to drag on the young generation, limiting their ability to purchase homes," the analysts said. 


The dark blue and light grey bars, which represent borrowers under the age of 40, show the bulk of student loan debt is owed by young people.


Analysts and economists have argued that student loans are dampening the millennial homeownership dream for a while now. Last year, the homeownership rate for thirtysomethings who have histories of student loan debt declined the most of any comparable age group. The share of young adults living at home is also on the rise: The share of 25- to 34-year-olds living with their parents rose to a record high of 17.7 percent for men and 11.7 percent for women in 2014, according to Census data.

It might be time for Mom and Dad to clear out their basements for a new tenant.

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