Study Suggests Student Loan Debt is Depressing the Housing Market

The Los Angeles Times reports that an Irvine-based homebuilder advisory firm, John Burns Consulting, recently released a study that attempts to quantify the impact of student loan debt on the housing market.  The study, which examines the student debt of 20- to 40-year-olds, estimates that:

• 5.9 million households under age 40 owe $250 or more in monthly student loan payments (which is three times the number of households compared to 2005),
• 414,000 home sales will be lost this year due to high levels of student loan debt, and
• these lost sales will result in an $83 billion dollar hit to the housing industry.

Although the firm prepared the study exclusively for its clients, a one-page graphic summary is available to the public.

The Times also examined other studies on this topic.  A Federal Reserve Bank of New York study, for example, found that people who never attended college are more likely to hold a mortgage and own a house than people who had attended.  Conversely, a May 2014 Brookings Institute report found that most people who carry student loan debt have low monthly payments, suggesting that student debt’s detrimental effect on the housing market is exaggerated.