Most of us as investors with San Diego property have an interest in millenials (people currently in their 20’s) as prospective tenants who can hopefully pay the substantial rents we desire and ultimately become a capable market for our real estate investments (though that of course takes individuals out of the rental market). As San Diego property managers, it’s our duty to foresee important market trends.
Think tanks and other sources have been looking at millennials in terms of debt load and their results are sobering. During the first decade of this century (2005 to be specific) 12.9% of the debt load from that group went to school loans and a much larger 63.2% went to mortgages. By 2014 36.8% went to school loans and only 42.9% went for mortgages.
In dollar terms. The average balance on school loans went from $17,4422 in 2005 to $29,575 in 2014. That’s a big jump in less than 10 years. And keep in mind that the more mature segment of the 20 somethings we rely on for solid middle class rents and home purchases, as a group – likely have well above average student loan debt.
We don’t have to be an economists to see that kind debt burden puts a lot of constraint on their resources for higher rents and real estate purchases.
If you would like to read more about this topic, MSN Money has provided an interesting article: http://www.msn.com/en-us/money/spendingandborrowing/millennials-to-get-hit-by-falling-debt-dominoes-say-pew-and-transunion-reports/ar-BB94rWQ
