Crushing student debt is further driving down homeownership in cities like Los Angeles that are already facing high costs and low inventory, according to a new report.
A joint survey of millennials by the National Association of Realtors (NAR) and American Student Assistance showed that the typical student debt load — about $41,000 — is several thousand dollars more than the annual median income of the respondents.
Jessica Lautz, who directs survey research at NAR, said those surveyed typically expect to delay homeownership by seven years.
"As you have fewer homes on the market, prices are just going to rise steeply and more out-of-reach for these consumers," Lautz said.
That's the case in Los Angeles, which the Census Bureau reports has the third-lowest homeownership rate of the country's top metros, or 50.1 percent. Only the San Jose and New York metros have lower shares of homeowners.
A survey of millennial renters conducted last year by the California Association of Realtors showed that student debt was keeping a quarter of those surveyed from even exploring homeownership.
Cody Hounanian can relate. At 26, he’s eager to buy a house in his hometown of Santa Clarita. But he and his family accumulated $100,000 in debt to send him to the University of California Santa Barbara.
"I can completely pay off my debt —which I’m working on — but for now, it’s put my life on hold," Hounanian said.
Hounanian, who now works as an advocate for student borrowers at Student Debt Crisis, said many who can't buy homes feel like they're being "robbed of part of the American dream."
"When we all imagine what the American dream is about, it doesn't include three roommates in a small apartment," Hounanian said. "It usually includes homeownership and success."
Hounanian hopes to one day join the 20 percent of millennials who own a home. Until then, he’s saving up for his downpayment, living at home with his parents.
The survey, which was conducted in April 2017 among 2,200 millennials, also found that student debt is preventing millennials from saving for retirement, changing jobs, marrying and having children.