That’s according to a new study by John Burns Real Estate Consulting. According to the study, 8% fewer home sales will take place in 2014 than normal, purely due to student loan debt.
“Our conclusion is that 414,000 transactions will be lost in 2014 due to student debt,” wrote Rick Palacios Jr. and Ali Wolf, authors of the study. “At a typical price of $200,000, that is $83 billion per year in lost volume.”
Student debt has skyrocketed from $241 billion to $1.1 trillion in just 11 years. In all, 29 million people between 20 and 39 have at least some student debt. Those 29 million people translate to about 16.8 million households.
“Of the 16.8 million households, 5.9 million (or 35%) pay more than $250 per month in student loans, which inhibits at least $44,000 per year in mortgage capability for each of them,” the study concluded.
The solution? Unfortunately, there doesn’t appear to be one, outside of drastically lowering the cost of education. As younger people graduate with more and more debt, their home-buying options will continue to dwindle.
“While we applaud the increasing education, we need to realize that it comes with a cost known as student debt,” Palacios and Wolf wrote. “We raised the red flag on student debt back in 2011 and continue to believe that this debt will delay homeownership for many, or at least require that they buy a less expensive home.”
Home sales are having a disappointing year all around, but a large part of the drop can be blamed on one thing: Student debt.