A new research brief from Harvard University analyzes the extent to which young renter households in their 20s and 30s are burdened by their student loan payments and explore the potential implications of these payment burdens on future decisions to pursue homeownership. Reflecting both increases in student loan payment amounts and income declines among young renters, the research finds that the prevalence of young renters with medium or high student debt burdens accelerated following the Great Recession. Between 2007 and 2013, the share of young renters with high student loan burdens nearly quadrupled, from 5 percent to 19 percent.
Two years ago, Mike Saavedra moved to Southern California, equipped with a new high-paying healthcare job and a plan. The former Arizona resident would rent by the beach while becoming familiar with neighborhoods where he may want to purchase a house. But a few months after starting his search, the Manhattan Beach renter cut it off. It was, he decided, the wrong time to buy. “I definitely think home prices are slightly overinflated,” Saavedra, 48, said. And he thinks there’s a good chance they’ll fall. “I would kind of like to wait and see if that happens.” After nearly seven years of sometimes fevered price hikes, the Southern California housing market has slowed markedly in recent months. Sales have fallen from year-ago levels and price appreciation has shrunk. In Los Angeles and Orange counties, year-over-year price increases peaked at 8.2% in April and have declined every month since. In October, home prices in those counties rose 5.5...
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