Student Debt Hindering First-Time Homebuyers

Kenneth Harney wrote for The Columbus Dispatch that student debt is impeding first-time homebuyers. This group traditionally accounted for 40% of home purchases, but only reached 28% in May 2013, according to the National Association of Realtors. The lack of first-time homebuyers creates a domino effect on the housing market: no one is there to buy starter homes, those who currently live in starter homes and wish to move to bigger homes have no buyers, and thus people in even bigger homes likewise have no buyers. The Wisconsin Institute conducted a research study on the matter. The rate of home-ownership among people paying off student loans is 36% lower than that of those with no student debt. Other factors pushing first-time homebuyers out of the market are 20% down payments for conventional loans, persistent negative equity problems, and competition from cash buyers with no financing contingencies.  While some people think renting is the answer, the true problem lies with the elevated costs of higher education.