STRATEGY
HOUSING NEEDS
Developing New Strategies
HOUSING PRICES AND STUDENT DEBT PUSH BUILDERS TO INNOVATE
by Bruce McNeilage
rior to Covid-19, median house - hold incomes in the United
P
Average student loan debt
$33,654
States were rising sharply, accord - ing to US Census data. From 2016 to 2019, median household incomes jumped from $59,039 to $68,703, a 16 percent gain. That was good news for American families anyway you spin it. On the surface, it should be good news to the housing industry as well. Over the same period, the median home price only jumped by about five percent from Q4 2016 to Q4 2019 ($310,900 to $327,100). Consumers have definitely made some gains in housing affordability in the past four years. But, go back a full generation, and the numbers tell a different story. Thirty-one years ago in 1989, the median home price was $124,000, while the median household income was $28,000. Household income was 22.5 percent of the median home price, compared to 20.7 percent in 2019. Admittedly, a 1.8 percentage-point difference doesn’t seem like a lot. Factor in the rise in student loan debt, though, and you can see why housing affordability continues to be a significant challenge, even as incomes have been rising. There is a record-high $1.6 trillion in outstand - ing student debt today. Here are some key stats, according to finance website Credible.com:
Average monthly student loan payment
$393
Total student loan debt
$1.598 trillion
Number student loan borrowers
43 million
Number of borrowers who owe $100,000 or more
2.8 million 22%
In 1989, adjusted for inflation, average student loan debt was about $10,000:
Source: Credible.com
56 | think realty magazine :: january 2021
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