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Restarting student loan payments will dent U.S. Housing: Survey

Another hurdle may be coming to the U.S. housing market. Pulsenomics surveyed more than 100 housing experts. Over 75% of them say the return of student loan debt repayments will have a negative effect on homeownership rates for more than a year. Part of the problem is that more than 30 million student loan borrowers are between the age of 25-49 years old. Those are the prime time years for Americans to settle down, buy homes, and start families. The strain of student loan repayments will potentially strain household budgets, limiting their options for homeownership. Yahoo Finance Reporter Dani Romero breaks down the survey.

Video Transcript


- The pause on student loan payments for borrowers over the past four years or so is coming to an end. The impact that it could have on the economy is weighing on investors' minds. And a new survey from Pulsenomics is finding that it may have a negative impact on the already troubled housing market. Let's bring in Yahoo Finance's Dani Romero to give us the details here. Dani, what do we know so far? This is something that just came up in our conversation with Keith Bliss as well.

DANI ROMERO: Brad, more than 100 housing experts are flashing their high beam lights given this survey from Pulsenomics, The biggest takeaway from this survey shows that more than 75% of respondents say that the return of the student loan repayments will have a negative effect on household formation and home ownership rates lasting more than a year. While 40% say that the impacts could last for at least three years.

The reason, well, 70% of student loan borrowers, which amounts to about 30 million people, are between the age of 25 and 49 years old. So this is known as the prime time for when Americans settle down into a home, get married, start having kids, and that source of demand will likely be under pressure as household budgets could be strained by student loan payments after almost a four-year pause.

Another point to highlight is that home ownership is just one of the few ways that lower income households can accumulate wealth. So that reduction could really have some long-term effects. The National Association of Realtors found that more than over-- excuse me, over a 30-year period, a homeowner who purchased a single family home would likely accumulate over $350,000 in home equity in the US. About 75% of that came from price gains, which we're seeing in the market right now.

- OK, so who wins in today's housing market then?

DANI ROMERO: Cash buyers have the upper hand in today's market. They can bypass a lot of the higher rates that are going on right now. And also about one in three homes is bought in cash. And then pending home sales just came out today, and we saw that it slightly had an uptick there in July, so that's the second month of a consecutive gain.

But so is this an indicator that the housing market is on a rebound? That's a really tough argument especially since there are several factors weighing the market right now. High mortgage rates, low inventory, high home prices. So the affordability is still under pressure right now. But the latest data does show that buyers are still in the market, whether it's the new home market or the existing home market, Brad.

- It's interesting to see those all cash buyers certainly still cashing in. Big thank you there, our very own Dani Romero.