Student loans could cripple future housing market

The rising level of student debt could pose as a significant financial obstacle for the housing market in the future.

The rising level of student debt could pose as a significant financial obstacle for the housing market in the future.

The national student debt load recently exceeded $1 trillion, according to the Consumer Financial Protection Bureau, With consumer credit card debt high nationwide as well, the real estate sector could see reduced activity.

"Excessive student debt can slow the recovery of the housing market. Student loan borrowers are sending big payments every month to their loan servicers, rather than becoming first-time homebuyers," said Rohit Chopra of the CFPB. "This debt can also put added stress on the borrowing capacity of the household and government sector."

It was noted that high levels of student debt will have the most significant impact on a prospective buyer's ability to save for a down payment, a trend that could make the prospect of buying foreclosed houses much more appealing to younger generations.

Additionally, changing social habits have younger generations shunning the suburban lifestyle, where housing is much more affordable than that found in an urban environment. As a result, the national rental market is expected to surge in the future as more potential borrowers are forced to wait on the sidelines as they pay off outstanding debt and save money to become homeowners.



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