It looks like all of those iced coffees, avocado toasts and subscription services aren’t necessarily to blame for the drop in homeownership among millennials.
New research by the Federal Reserve Bank of New York attributes the huge decrease in young Americans buying homes to tuition rate hikes and an overall increase in student debt, according to Bloomberg. The research estimates that student debt is to blame for as much as 35 percent of the drop in young homeownership between 2007 and 2015.
Since 2009, student debt has doubled to more than $1.4 trillion, and it’s still on the rise. As more young Americans are priced out of buying houses, millennialscould reduce their spending on other things, including furniture, repairs, and more. Household spending accounts for about 70 percent of the U.S. economy’s growth, Bloomberg reported.
The Fed’s research suggested that about 360,000 additional young people would have owned a home in 2015 if college tuition had remained at 2001 levels. The total would be roughly 2.9 million homeowners between the ages of 28 and 30.
Millennials struggle to save enough money for down payments, and are often priced out of the market. About 70 percent of millennials have reported that they’ve saved less than $1,000 for a house down payment, according to a study released earlier this year. [Bloomberg] – Katherine Kallergis