posted on 11 September 2016
Homeownership is on the decline , especially among the younger age group, while rental household formation has been rising, and millennials are a major share of this growing rental population. CoreLogic Rental Property Solutions tracks rental applicant data, and new analysis reveals that 60 percent of rental housing applicants applying from 2011-2015 were millennials.
Student loan debt has become a growing burden nationwide, particularly with millennials, many of whom are trying to rent an apartment, condo or home. The aggregated outstanding student loan debt in the U.S. has more than tripled over the past decade, increasing from $380 billion in 2004 to $1.3 trillion in 2015 , which is the second-highest level of consumer debt only behind mortgages.
For millennials applying for rental properties, CoreLogic took the application data, extracted detailed tradeline information from the credit bureaus and generated a lease default score. CoreLogic data shows that the average student loan balance reached $31,900 in 2015 for age group 20-34 (Figure 1). This is a 41.8 percent increase compared with the average balance of $22,500 in 2008. At the same time, the median student loan balance for the same age group increased 53.7 percent to $18,600 in 2015 from $12,100 in 2008. The Joint Center for Housing Studies at Harvard University published the 2013 student loan balance of U.S. households . The average balance and median balance of renter households for age group 20-39 was $28,173 and $16,000, respectively. CoreLogic data shows the average student loan balance in 2013 for rent applicants in the same age group was $30,263 and the median balance was $16,400. These numbers are very close to each other.
Similar to the outstanding student loan balance, the portion of millennial renters age 20-34 who had student loans also increased every year but one since 2008, as shown in Figure 2. This is a 21 percent increase from 2008, when is stood at 38 percent, to 2015, when it stood at 48 percent. We can see from Figure 2 that indeed millennials have the highest percentage of student loan debt compared with older age groups. Considering the declining homeownership rate and the increasingly hot rental market, the growth of student loan debt is likely an important factor preventing millennials from saving for a down payment to buy a home and maintaining their rental status for a longer period of time.
© 2016 CoreLogic, Inc. All rights reserved.
1 U.S. Census Bureau News, July 28, 2016.
2 Investing in Higher Education: Benefits, Challenges and the State of Student Debt, Executive Office of the President of the United States, July 2016.
3 Joint Center for Housing Studies, Harvard University, November, 2015.
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