Real estate agents have told me personally that that they’re seeing fewer young people than usual among the herds of interested home buyers, but now it’s official: A study by John Burns Real Estate Consulting found that the burden of student debt will reduce by 8% the number of homes expected to transact in 2014. (See the L.A. Times report, “Student loan debt curbs housing market by $83 billion, study says.”)
The basic problem is that, to put it semi-mathematically, a whole lot of young people owe at least $250 each month in student loans. With every $250 of debt reducing their home borrowing and purchasing power by $44,000, you can see why this swiftly puts many of them out of the running.
If you are in the process of selling your home, this doesn’t mean that no one will be out there to buy it. The real estate market is turning into a “seller’s market” (lots of interested buyers) in many parts of the United States, and some prospective buyers may have already been waiting for years to finally pay off their loans and buy their first home.
But this may necessitate a revision in selling strategy for some sellers, especially those selling “starter” homes. When preparing advertising material and deciding how to “stage” your home, the image of the young couple about to have children may have to be scrapped. Perhaps a retired couple looking to use a spare bedroom as an office is actually your most likely buyer.