Millennials’ concerns over debt have become so significant that they’re one of the main reasons why so many are reluctant to buy their first home.
A January survey by Rocket Mortgage shows that almost half of all millennials quizzed that months said they delayed making a decision to buy a home out of the fear of amassing too much debt. In addition, they reported concerns over saving for a down payment and the high cost of homes today.
As such, many millennials have opted to delay buying a home rather than take out what they fear might be a crippling loan, the survey revealed.
Millennials are entering the housing market at a time of soaring home prices, low housing inventories, high inflation, and heavy competition for the limited number of homes that are available.
Further, the age group has shown itself as more debt-averse than older generations, Fortune reported. For instance, credit card debt among millennials is much lower than older age groups. The average credit card debt for millennials is just $4,300, compared to $7,155 for Gen Xers and $6,043 for baby boomers, according to a 2021 study by Experian.
The debt aversion of millennials may stem from having heavier student loan debt than previous generations. They may feel like they already have enough debt and are scared to take on any more, Fortune reported. Almost 15 million millennials have at least some student loans yet to repay. The average borrower was nearly $40,000 in debt, which is higher than previous generations, according to EducationData.
Indeed, student debt has long been blamed for preventing many home sales. Half of the potential home buyers surveyed in 2021 say they haven’t bought yet because of student debt, according to a report by the National Association of Realtors and Morning Consult. Millennials were the most likely to point to student debt for delaying homeownership.
Millennials also reported other factors behind their decision to delay buying a home, including the need to save up more money for a down payment, rather than borrow at a higher rate. They also cited the high cost of housing today, with home prices at record highs.
The COVID-19 pandemic crunch has hit millennials much harder than older generations, with low inventory, inflation and tough competition pushing up costs. Older generations, thanks to the equity they have trapped in their homes, have effectively priced most millennials out of the home market, Fortune said.