Student Debt Creating Home Ownership Challenges, But Millennials are Finding a Way
Burdened by student debt and facing an unaffordable residential market, many millennials have by necessity delayed purchasing a home. The toy company, Hasbro, has even released a new version of its iconic board game: Monopoly for Millennials. In this variation, players don’t buy houses, rather they purchase experiences, such as visits to a vegan restaurant or a meditation retreat. And there is no truth to this rumor of this satirical university study’s findings that the most popular fantasy for millennials is role playing as a couple that owns a house.
According to a study by Realtor.com, total student debt is a staggering $1.52 trillion. This debt alone could buy every U.S. house 1.9 times over. “The average student loan borrower owes $34,500 - $8,500 more than the typical down payment of $26,000.” Additionally, millennials are now the largest cohort in the U.S, workforce, and spend an average of 34% of monthly income to pay off debt. For the last number of years, due to this heavy debt load, millennials have delayed marriage, raising a family, and buying a home. This, in turn, has negatively impacted the U.S. residential market.
Florida’s numbers are in line with the national figures, with student debt in the state standing at $75.9 billion – with 2,197,00 borrowers.
But fortunately, of late, things are changing - as the old adage says, “Necessity is the mother of invention.”
Many millennials, as a result, are seeking out less expensive housing markets (both sale and rental) in less expensive areas of the country, primarily in the South, Midwest, and the Western mountain states – and this is where much of the nation’s population growth is occurring.
Secondly, millennials have been stereotyped as urban, but the available studies show they are headed for greener pastures in the suburbs and exurbs.
According to an analysis by NewGeography.com based on data from the Census Bureau, “America’s suburbs and exurbs continue to dominate for those aged 25 – 34 in the 53 major metropolitan areas studied.” It is the extent that is even more surprising. The data informs us that an amazing 78.9% of metropolitan area growth of this age group has occurred in the suburbs and exurbs. The urban cores of big cities accounts for just 20% of millennial growth.
And the National Association of Realtors alerts us that the trend is continuing. As of mid-2018, only 15% of recent millennial buyers have purchased a home in an urban area, down from 21% in 2015.
“Research and data has dispelled the long held myth that millennials are city-flocking suburbia haters … many are turning to the suburbs with their families,” a December 2018 article in Bisnow observed. “The first phase is millennials moving to the suburbs for larger, more affordable homes and access to schools, so adequate single-family and Multifamily housing will be necessary.”
Developers are taking note: “Retail follows rooftops, so retail [and entertainment venues] to meet the new resident’s requirements will follow.