CoreLogic: Student Loans Not Depressing Home Ownership

depleted-moneyThis study makes a lot of sense. Student debt is probably no more of a determent to home ownership that it was 25 years ago. For a more detailed look at this subject – please read the article below.

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One of the pet reasons for explaining the lack of demand for houses among millennials is the presence of ever-escalating student loan debts. The thinking goes that college graduates are so mired in debt that they either cannot afford to buy or are too afraid to run up more debt, and so they stay living with their parents or find cheap places to rent.

However, Mark Fleming, chief economist at CoreLogic, isn’t buying it.

Citing a recent panel discussion at the Urban Institute on “Quantifying the Impact of Student Loan Debt on Homeownership,”  and recently published reports by the Brookings Institute and Jeffrey Thompson, economist at the Board of Governors of the Federal Reserve System, Fleming draws the conclusion that  while student loan debt undoubtedly affects financial decisions for those post-college, there is zero empirical evidence to back up the claim that these debts are keeping young people from buying their first homes.

For one thing, Fleming says, the monthly payback amount anyone has to spend on a student loan is based on a percentage of income. This percentage has remained virtually unchanged since the mid-1990s, but then, so have earnings—and members of Generation X didn’t shy away from buying houses just because of these obligations.

Student loan debt is at the $1 trillion mark, and there are more outstanding loans than ever. But Fleming says these facts alone do not show that student loan debt is a bigger burden for millennials, much less one that will prevent homeownership.

To read the complete article – please use the link below.

Home Ownership

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