Buyers with student debt lose almost $100K from their budget

Zillow calculates impact on renters hoping to buy

Buyers with student debt lose almost $100K from their budget

Potential first-time buyers who are currently renting will see their homebuying budget slashed by $92,440 if they are carrying student loan debt.

An analysis by Zillow has found that the average monthly student debt payment for renters planning to buy in the next 12 months is $388. On that basis, if they want to cap their spending on a mortgage and student debt at 30%, their budget would be $269,400.

While that figure would give them the choice of 52.3% of homes currently listed for sale, those without student debt could afford 66.4% of current listings with a budget of $361,800.

"Higher education pays off when it comes to lifetime earnings and the long-term odds of homeownership but carrying any kind of debt limits how much home buyers can afford,” said Zillow Senior Economist Aaron Terrazas. "With for-sale supply still tightest for the most affordable homes but increasingly available at higher prices, even a small reduction in a buyer's target price point can result in substantially fewer options."

Around a third of renters planning to buy a home in the next year have student debt for themselves or someone else.

The analysis shows how the impact of student debt affects the choice of homes affordable in different markets across the country.

Metropolitan Area

Max Home
Price,
Average
Student
Debt

Share of
Listings
Affordable
with
Student
Debt

Max
Home
Price, No
Student
Debt

Share of
Listings
Affordable,
No Student
Debt

Median Home
Value,
September

2018

United States

$ 269,400

52.3%

$ 361,800

66.4%

$ 220,100

New York, NY

$ 357,300

29.4%

$ 449,700

40.9%

$ 431,000

Los Angeles-Long Beach-
Anaheim, CA

$ 326,700

6.3%

$ 419,200

13.5%

$ 647,100

Chicago, IL

$ 320,500

58.8%

$ 413,000

71.9%

$ 222,200

Dallas-Fort Worth, TX

$ 308,700

45.0%

$ 401,100

64.0%

$ 233,200

Philadelphia, PA

$ 320,500

68.6%

$ 413,000

79.3%

$ 229,300

Houston, TX

$ 292,200

48.1%

$ 384,600

65.3%

$ 200,900

Washington, DC

$ 507,600

62.0%

$ 600,000

71.1%

$ 401,000

Miami-Fort Lauderdale, FL

$ 227,900

21.4%

$ 320,300

38.3%

$ 278,400

Atlanta, GA

$ 300,400

52.3%

$ 392,800

66.8%

$ 209,700

Boston, MA

$ 423,500

38.1%

$ 515,900

51.0%

$ 458,000

San Francisco, CA

$ 528,000

16.4%

$ 620,500

26.0%

$ 961,200

Detroit, MI

$ 257,900

62.0%

$ 350,400

76.1%

$ 157,200

Riverside, CA

$ 276,000

29.0%

$ 368,400

49.4%

$ 362,000

Phoenix, AZ

$ 276,700

40.3%

$ 369,100

60.5%

$ 258,300

Seattle, WA

$ 410,100

33.8%

$ 502,500

48.5%

$ 486,600

Minneapolis-St Paul, MN

$ 365,800

60.7%

$ 458,200

73.3%

$ 263,300

San Diego, CA

$ 357,800

9.7%

$ 450,300

20.2%

$ 589,200

St. Louis, MO

$ 281,300

73.3%

$ 373,800

82.9%

$ 163,100

Tampa, FL

$ 227,900

43.9%

$ 320,300

65.4%

$ 208,400

Baltimore, MD

$ 392,500

67.2%

$ 484,900

77.0%

$ 265,600

Denver, CO

$ 365,800

32.0%

$ 458,300

50.6%

$ 398,400

Pittsburgh, PA

$ 260,300

72.6%

$ 352,700

82.7%

$ 142,300

Portland, OR

$ 345,800

26.2%

$ 438,200

46.8%

$ 391,400

Charlotte, NC

$ 286,400

44.4%

$ 378,800

62.5%

$ 199,400

Sacramento, CA

$ 313,900

24.3%

$ 406,400

44.5%

$ 400,600

San Antonio, TX

$ 259,300

54.4%

$ 351,800

71.5%

$ 187,800

Orlando, FL

$ 235,800

34.7%

$ 328,200

59.0%

$ 231,000

Cincinnati, OH

$ 284,800

66.1%

$ 377,200

78.8%

$ 164,500

Cleveland, OH

$ 232,600

69.8%

$ 325,000

81.9%

$ 142,700

Kansas City, MO

$ 291,900

61.8%

$ 384,400

76.3%

$ 185,500

Las Vegas, NV

$ 251,400

29.3%

$ 343,900

57.0%

$ 273,800

Columbus, OH

$ 284,500

58.4%

$ 376,900

71.0%

$ 184,200

Indianapolis, IN

$ 263,400

63.3%

$ 355,900

76.6%

$ 157,200

San Jose, CA

$ 610,800

11.7%

$ 703,200

18.3%

$ 1,288,700

Austin, TX

$ 356,800

52.5%

$ 449,300

66.7%

$ 300,600