Investing in college sees homeownership returns

The homeownership gap has widened for those without a degree

Investing in college sees homeownership returns

While the price of college can be intimidating and student debt can be a heavy burden, not getting higher education is likely to cost more in the long run as the homeownership gap widens for those without a college degree.

First American Chief Economist Mark Fleming said that although millennials are less focused on becoming a homeowner compared to other generations, they will not regret investing the time and resources to earn that degree when it comes time for millennials to put down roots.

When millennials enter their prime home-buying age, they have additional house-buying power from their enhanced earning power. Fleming cited research by Brookings Institution which found that the average 50-year-old with a college degree earns about $46,500 more annually than the average person with just a high school degree.

First American has identified a growing correlation between higher education and homeownership, with the impact almost doubling in 10 years. In 1997, the difference in the homeownership rate between those without a high school degree and those with a college degree was 11%. By 2016, this gap had widened to 21.3%, before declining modestly to 20.5% in 2017.

Zooming in on the different generations and comparing them as they entered their prime home-buying years at age 30 showed the increase in importance of education for homeownership. First American found that less educated baby boomers were still nearly as likely to become homeowners as baby boomers with degrees. However, in 2011, 41% of millennials with a college degree were homeowners, compared to only 22% for those without a high school degree.

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