How Sen. Warren’s Student Debt Cancellation Plan Would Affect First-Time Homebuyers

“The idea of taking on a mortgage when you’re still paying off tens of thousands of dollars in student loans is a nonstarter for many people,” Redfin chief economist Daryl Fairweather said in a statement.

“If student debt were eliminated, college grads would be able to start building wealth through homeownership, laying down roots and contributing to their communities years earlier in their lives. An influx of young, educated homeowners could have positive impacts on neighborhoods and society at large.”

Redfin’s analysis included a look at the effect of Warren’s student debt forgiveness plan in major metropolitan areas. The median 24- to 44-year-old homebuyer in Detroit, where the typical home costs $130,000, could save for a down payment in just 4.2 years — the shortest time in the nation — down from 7.4 years currently.

At the other end of the spectrum, that homebuyer’s counterpart in San Francisco would need 23.3 years to save $120,587 for a full down payment on a house that typically costs $1.4 million, down from 24.9 years currently.

Metro areas with the highest ratios of student debt to income could see the biggest decrease in the time it takes to save for a full down payment. In particular, student-debt laden homebuyers in the South stand to benefit most — for example, Memphis by 4.3 years, Birmingham by four years and New Orleans by 3.9 years.

Yet Redfin says that the plan “could actually make overall affordability worse as demand for homes would increase with a surge of new buyers,” it said, concluding that “the key to solving the housing affordability crisis is to dramatically increase the supply of homes by building more homes in the places where people want to live.”