College grads have claimed for years that they were putting off buying a home because of student debt. Now, there's strong proof that their loans really have pulled down homeownership rates.
About 32% of those in their 20s owned a home in 2007, but that's fallen drastically to 21% in 2016.
While the poor labor market and memories of the housing bubble certainly played a role, student debt can explain up to 35% of the decline, according to a report from the Federal Reserve Bank of New York released Thursday.
If it sounds small, think of it this way: about half of Americans don't go to college and some of those who do aren't dragged down by student debt.
The results suggest that the rise in college costs will result in "weaker spending and wealth accumulation among young consumers in the years to come."
It's consistent with surveys that have asked those with student debt if it affected their decision to buy a home. Half of those under the age of 35 surveyed by the National Association of Realtors in 2016 said it had delayed their purchase. And 25% told Pew Research Center that student loans had made it harder to buy a home in 2011.
Tuition and fees at public colleges grew by an average of $3,843 from 2001 to 2009, the Fed report said.
On average, students paid about $14,000 to attend an in-state college last year. Despite the increasing costs, Americans still overwhelmingly decided to go to college and take on more debt to do it.
Every additional $10,000 in student debt is associated with a 1.5 percentage point decline in the probability of buying a home by the age of 30, the report said.
A previous report from the Fed suggested that college grads with student debt might catch up to their peers and buy homes after the age of 33.
Delayed homeownership for young people can have ripple effects throughout the economy. Almost half of people between the ages of 23 and 25 are still living with their parents, according to the report. That means they're not buying other things like furniture or appliances.
Fed researchers sent a warning to states that have cut funding for their state colleges in recent years, sending tuition higher. These states can expect to see a weaker market for starter homes and more "boomerang" adult children. A policy decision to fund state higher education can stimulate youth homeownership in the long run, the report said.