By May 26, 2016 Read More →

For many Denver millennials, not saving for a home may be a choice, not just student debt

Higher-income, college-educated millennials (with or without debt) save a lower percentage of their incomes towards a home than those with no degree and lower incomes.

That’s the finding in a new report released Monday by Seattle-based Apartment List, suggesting that at least some of the extended time it takes millennials, people ages 18 to 34, to save for a downpayment may be their own choice.

The report compiled data from surveys completed by more than 30,000 renters nationwide and found that millennials with student debt payment spend just as much as those without, rather than saving a greater proportion of their incomes towards a down payment.

Nationwide, “Millennials without a college education have smaller student debt payments (not zero), but their disposable incomes are about 30 percent lower,” the report says. “Despite this, they manage to put away about $2,000 annually. College graduates (with or without debt) have significantly higher incomes, but aren’t saving much more.”

That picture is somewhat reflected when comparing millennials with no college education to millennials with college education and no student debt in Denver, but less so when it comes to those who are college educated but have student debt:

  • In Denver, college-educated millennials with student debt earn an average income of $57,109 and save about $230 per month — meaning it would take them 11.8 years to save $42,500, a 20 percent down payment on the median price of a starter home in Denver.
  • College-educated millennials with no student debt earn an average of $70,310 annually and save $180 per month; it would take them 14.8 years to save the 20 percent down payment for a starter home in Denver.
  • Millennials with no college education, and a significantly lower average annual income of $37,190, save $140 per month, and would thus need 23.7 years to save for a starter home’s down payment.

“If a college-educated millennial receives a $10,000 increase in disposable income, they would likely spend $2,500 on a nicer apartment, $6,500 on travel, dining out, and other purchases, and only put $1,000 towards savings,” says the report. “Based on this, it seems that millennials may have the capacity and ability to save more for a home if they so choose.”

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