By Scott Dick, Government Affairs Director, Monterey County Association of REALTORS®

Many housing experts expected the homeownership rate – which has been declining since 2004 – to rebound as Millennials entered the housing market. Instead, the homeownership rate has continued to decline. Even the homeownership rate for the under-35-year-old segment of the market has declined. Many theories have been advanced for the slower-than-average entry into homeownership of Millennials, particularly student loan debt.

• Freddie Mac’s monthly report for September states that student loan debt does play a role in the low homeownership rates among millennials, but it does not fully explain why this generation is slow to purchase a home.

• The report states, “Student loan debt alone can’t explain the low homeownership rate among millennials. After all, the homeownership rate in this cohort has dropped 5 to 6 percentage points for student loan borrowers and non-borrowers alike.”

• Pre-crisis homeownership rates of 27-to-30-year-olds with student loans, with at least some college education, were 2 to 3 percent higher than homeownership rates of those with no student loans. This gap started to close during the recession and changed direction in 2011.

• The homeownership rate of borrowers was about one percentage point lower than the rate of non-borrowers by 2014.

• One explanation is graduates of four-year institutions whose return on their education investment is less-than-expected, so their wages are less than anticipated.

• Furthermore, borrowers who completed their degrees and found that their post-college earnings are matching their expectations may be delaying a purchase for other reasons.

• As for those who were economically worse off than before they started school, they have no improvement in their job prospects but they have significant student debts to repay.