Millennials More Likely to Rent
It is popular these days to blame student loans for a decline in first mortgage rates. The argument is that student loans cause a domino effect, even though data shows that borrowers respond to higher student loan debt at graduation by choosing longer repayment terms, so that the percentage of income devoted to repaying student loan debt remains constant. The average monthly student loan payment for Bachelor’s degree recipients is less than the average car payment, so one could just as easily blame auto loans for declines in the housing market. This ignores stricter mortgage credit underwriting criteria as a potential cause. Perhaps, Millennials also prefer the flexibility of renting.
In any event, CoreLogic, a source of real estate property data, is blaming student loan debt for an increase in renting. CoreLogic released data showing:
- 60\% of applicants for rental housing from 2011 to 2015 were Millennials.
- The percentage of Millennials (age 20-34) with student loan debt has also increased each year since the start of the economic downturn in 2008, from 38\% in 2008 to 48\% in 2015. This is also a higher percentage of student loan debt than for other age groups.
- The average student loan balance for renters age 20-34 was $31,900 in 2015, up from $22,500 in 2008. Median student loan debt increases to $18,600 in 2015 from $12,100 in 2008.
This does not necessarily mean anything, since younger adults are more likely to rent an apartment than to own real estate. Recent college graduates are more likely to have student loan debt than older age groups. Millennials are also more likely to change jobs, according to Gallup.