Achieving the American dream seems unattainable to many millennials, with 48 percent lacking any savings for a home down payment. Many have student loan debt to blame, which has reached a collective $1.3 trillion in the US.
Although there’s no denying that millennials are different from older generations in many ways, 89.4 percent of them share the same dream that their parents and grandparents had – they want to become homeowners, according to a new study from Apartment List.
However, that dream isn’t particularly attainable for many millennials, due to student loans. The average debt burden of students graduating with loans has increased over the past decade to $34,000, according to the Federal Reserve Bank of New York. That adds up to a collective $1.3 trillion in US student loan debt – an increase of about 170 percent since 2006.
Those loan payments are taking away from what could be going towards a down payment for a house. In fact, a whopping 48 percent of millennials surveyed said they currently have nothing saved for a down payment. Not even a penny.
The Apartment List study estimates that just 12.1 percent of college graduates who are repaying student debt will be able to save for a 20 percent down payment within the next five years. It also estimates that two-thirds will require more than two decades to save a 20 percent down payment, based on their current savings rate.
While student loans are a major hurdle for millennials, the study also pointed to stagnant wage growth and rapid home price appreciation as contributing factors.
“Given these trends, it seems that for many millennials, the dream of homeownership will continue to loom on the horizon, frustratingly beyond reach,” the survey states.
But millennials apparently don’t need a study to point out the uphill battle they face when it comes to home ownership. The number of millennials surveyed who believe they will always rent is on the rise, with 11 percent of respondents expressing that sentiment.
And of those who said they do plan on purchasing a home at some point, 30 percent said they wouldn’t be able to do so until five or more years have passed. That response was the most common of the survey participants, with just four percent saying they planned on doing so within the next year.
While some respondents admitted that they would be relying on financial help from their family to meet the down payment threshold, the survey found that those who make the best salaries will receive the most help. In other words, those who need the most assistance expect to receive the least amount.
For example, when millennials who make more than $100,000 a year were asked how much money they expect to receive from family, the average came to more than $50,000. Those who make less than $25,000 expected to receive an average of $4,300 in assistance.
A total of 6,4000 millennials were polled for the survey by Apartment List, a website of rental listings across the United States.
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