Millennials are increasingly having trouble saving enough to get a down payment to buy a home. While college graduates do statistically earn more over their lifetimes than non-graduates, student loan debt decreases their ability to save. Average student loan debt in 2015 was $34,000. This means a monthly payment of over $350, a substantial amount for someone just starting out.
The chart shows national averages for the number of years to save a down payment. In cities like Austin, San Diego, San Francisco, Los Angeles and Denver it takes many more years – over twenty for millennials without a degree.
This could be a developing long-term trend that causes a drop in single-family home prices while rental prices increase. If millennials can’t own, they are captive to whatever rental prices are.
According to a new study released by ApartmentList, the college graduates saddled with that debt are saving half as much for down payments as those without it, and taking about four years longer to put a first payment down.
But skipping higher education isn’t the answer: Those who did not complete college at all are even worse off.
The numbers are dire.
We find that in Austin, San Diego, San Francisco, Los Angeles and Denver — one-fourth of the metros we analyzed — millennials without a college degree would need more than 20 years to save enough for a down payment. In San Francisco, college grads with debt would need as much as 27 years!
Students graduating in 2015 with loans had an average student debt of $34,000, a 70 percent increase from 10 years earlier.
As incomes have stagnated, tuition and home prices have risen sharply.