The homeownership rate among Americans is at a 50-year low and could be getting worse with the help of mounting student loan debt.
A new report from the New York Federal Reserve points out that Americans are better off with a college education, in terms of higher salaries and the greater likelihood of owning a home. That said, much depends on how much college debt a young adult has accumulated.
“Yet, student debt appears to dampen homeownership rates among those with the same level of education,” the New York Fed reported.
Since the financial crisis and Great Recession of ten years ago, Americans have shifted away from housing-related debt and more toward auto and student loan debt. Aggregate student loan balances hit $1.3 trillion at the end of 2016, up 170 percent from 2006.
Graduates with student debt are less likely to own a home in their early 30s than those who completed their education without taking on as much or any debt, the New York Fed found.
“Homeownership represents an important means of wealth accumulation, with housing equity being the principal form of wealth for most households,” the N.Y. Fed states. “So, changes in the way we finance higher education, with an increased reliance on student debt, may have important implications for the housing market and the distribution of wealth.”