Student loan debt holding back first-time home buyers
Student debt continues to weigh down potential homebuyers, as the share of first-timers decreased for the third-consecutive year, according to the National Association of Realtors.
Of those who said saving to buy a house is the biggest challenge they face, half claimed it was due to their student loans. First-time buyers constitute a third of the market in 2018, a decline of one percentage point from last year. The share hasn't reached 40% since 2010.
"Even with a thriving economy and an abundance of job opportunities in many markets, monthly student loan payments coupled with sky-high rents and rising home prices make it exceedingly difficult for potential buyers to put aside savings for a down payment," Lawrence Yun, NAR chief economist, said in a press release.
Increased down payment sizes made it more difficult for first-timers, too. The median first-time buyer put down 7% of the purchase price in 2018, the highest amount since 9% in 1997 and up from 5% last year. On the whole, the median down payment was 13%, the highest percentage since 2005 and up from 10% a year ago.
Of course, the low inventory, rising home prices and climbing mortgage rates took their toll as well, as pending home sales fell throughout 2018.
"With the lower end of the housing market — smaller, moderately priced homes — seeing the worst of the inventory shortage, first-time homebuyers who want to enter the market are having difficulty finding a home they can afford. Homes were selling in a median of three weeks and multiple offers were a common occurrence, further pushing up home prices," said Yun.