Student debt nearly twice total value of US housing market

by Candyd Mendoza16 Oct 2019

The total student debt in the United States has grown to nearly double the housing market, holding off potential young buyers from purchasing a home.

Data from realtor.com revealed that the total student debt could buy every US house on the market 1.9 times over. This showed more students are getting deeper in debt, and it is delaying their homeownership.

There are 42.8 million people carrying student debt in the US. The average student-loan borrower owes $34,500, which is $8,500 more than the typical 10% down payment. Nationally, a typical US home sells for a median of $260,000 with a 10% down payment of $26,000.

The total value of US homes on the market is $780 billion – 1.9 times less than the total outstanding $1.5 trillion student loan debt.

"Student debt has ballooned to an all-time high as the price of education continues to outpace wage growth, and this is holding back many potential buyers from being able to purchase a home," realtor.com Senior Economist George Ratiu said. "Student debt is already impacting borrowers' ability to buy a home, and education debt is expected to hamper consumers' financial decisions for many years down the road."

Over the past few decades, wage growth has remained sluggish compared to the rapid growth of higher education costs. The typical tuition at a public university has climbed to four times the rate of the average wage since 1986, while private university tuition has grown seven times faster than the pace of the average wage growth over the same time.

More than 15 million millennials comprise 34% of all student borrowers. Their total debt of $498 billion is over half the value of all US homes for sale, according to realtor.com. Millennial borrowers have an average balance of $33,000.

"The important implication of rising debt is that young generations are delaying major life decisions," Ratiu said. “On the real estate front, the affordability crisis in major cities is driving young families to more affordable Midwestern and Southern markets, where savings for a down payment stretch much further and can turn owning a home from a future dream into today's reality."