I predict that this current generation of home buyers will be significantly delayed buying homes compared with previous generations. Many will be so late into the home buying cycle that they will become lifelong renters. In fact, the traditional early home buyers have consisted of the most educated in our population. After all, those with post secondary education make up the upper echelon of income earners.  

If we go back to the 1980’s when I bought my first house, I came out of university with a good paying job and zero student debt. I was 23 years old. I was able to secure a high ratio insured loan to purchase my first house and only put 5% downpayment. I purchased a brand new home in 1987 and put down under $10,000 in cash. Within a couple of years, that home had appreciated sufficiently that I was able to sell it and move into a larger home. My downpayment had mushroomed from a mere $10,000 to about $40,000 for my second home. I was solidly on the ladder of home ownership. 

My first home and my second home were easily affordable within my salary. But I had no other debts. I didn’t have car payments, or student loans to deal with. If I had other debts, my home affordability would have been far less. 

The circumstances today are far different. The average student graduating from university with a bachelors degree has just under $40,000 in student debt. US Federal guidelines put borrowers on a 10 year track to repay their debt. But history has shown that the average bachelor’s degree holder takes 21 years to pay off his or her loans. 

Think about it. There are 44 million borrowers who collectively owe about $1.5 trillion dollars of student debt. Will people buy a home before they’ve paid off their student loans? The math doesn’t add up.