student loan study on housing market

Student Loans Eat $83 Billion in Housing Sales

Michael Lux Blog, Student Loans 2 Comments

How many home sales do student loans prevent?

According to one California based Real Estate Consulting Group, the number is 414,000.

The Findings

Based on their calculations, the 414,000 lost home sales equates to $83 Billion dollars, or 8% of the housing market.

The stat that should put things in perspective for borrowers looking to borrow a home is that $250 in monthly student loan debt equates to $44,000 less in home buying power.  That means that $250 a month can be the difference between just another home and the home of your dreams.  It also can be the difference between being able to buy a home and going without.  For those wondering, this number is an average and can fluctuate from one buyer to the next.  If you want to know how your debt affects your ability to buy a home, be sure to check out our in depth analysis on how to buy a home with student loans.

The number of people paying over $250 per month is also growing.  Less than ten years ago, 22% of households with student were paying over $250 a month.  That number has surged to 35%.

The study also found that in all but the highest earning brackets, borrowers paying over $750 per month on student loans are priced out of the housing market.

The Scary Part

The director of research point out that, “we actually think it’s pretty conservative.”  He based this opinion on the fact that the study only looked at the effect on home buying for people with student loans from 20 to 40 years of age.

It is also worth noting that not just the student loan borrowers are held back by student loans.  Parents who co-sign loans can have their home buying chances derailed by student debt.

What does this mean for me?

If you have student loans and want to buy a house, it means you need to lower your monthly obligations.  There are two ways of accomplishing this goal.  Option one is to pay off a loan entirely.  It doesn’t necessarily have to be your largest loan or your highest interest loan; you just have to get a loan off your credit report.  Each loan you eliminate makes you better qualified for a mortgage.  Option two is to refinance some of your debt.  Find a lender who will either lower you payments by lowering your interest rate, or by giving you more time to pay off your loans.  The lower your regular minimum monthly payments are, the better shot at a home loan you will have.

If you are not in the housing market, this study, and others like it, point to a disturbing economic trend.  Student loans are hurting the housing market.  As we all learned in the last recession, the housing market has a huge effect on the economy.  As student loan debt in the United States continues to grow, it represents a growing threat to our economy.  The results of this study help put a number on that threat.


  • It really is amazing, when you think about it, what the opportunity cost is for student loan payments, considering they weren’t such a major portion of people’s payments even 20 years ago.

    • Absolutely. The opportunity cost isn’t a purely fiscal one either. Lots of people end up delaying marriages and having kids because of their student debt obligations.