Don’t Be a Fool–Stay in School (If You Want to Buy a Home)

You don’t have to have a college degree to buy a home. But it helps.

Trulia, San Francisco, said when it comes to homeownership, education really does matter. Its report (https://www.trulia.com/blog/trends/housing-by-degree/) found a correlation between education and homeownership, noting that a college degree–or better yet, and advanced degree–is one of the surest ways to move into homeownership.

“More education tends to lead to greater incomes and homeownership,” said Cheryl Young, senior economist with Trulia and author of the report.

Key report findings:

–Homeownership gains between degrees are highest when people earn high school degrees (15.9 percentage points) and bachelor’s (10.9 percentage points) degrees.

–Age and career stage also play a strong role in providing paths to homeownership. Those in the later stages of their career through retirement having the largest share of homeowners.

–In some metros, homeownership is a challenge no matter what degree you hold. In San Francisco and New York, for example, those with professional degrees earn median incomes of $150,000 or more, but homeownerships rates are less than 60%.

The report noted more education begets greater homeownership rates, but only to a certain point. Median incomes peak for professional degree holders (such as a medical or law degree), and with the highest academic degree–a doctorate–incomes drop back down by $17,000. As incomes rise and dip, so do homeownership rates; therefore, doctorates own homes at a rate closer to graduate degree holders, or 2.3 percentage points less than professional degree holders.

The largest jump in income, at a median increase of $35,908, is between graduate degree holders and professional degree holders. The difference between homeownership rates among these groups, however, represents the smallest rise between degrees at 2.4 percentage points.

“This suggests that while there may be a household income return to higher education, the homeownership returns for advanced degree holders are diminishing,” Young said.

Importantly, the study equates the ability to become a homeowner with income, not ability. While more education equates to higher levels of homeownership and larger homes, the report said “significant opportunities” exist for those without college degrees to own homes in places such as in Long Island, N.Y. (74.5% homeownership rate for high school degree holders), Troy, Mich. (69.2%), Grand Rapids, Mich. (68.8%), and Deltona-Daytona Beach, Fla. (68.2%). Long Island, N.Y. also has the highest homeownership rate (79.6%) overall among the biggest 100 metros.

“These markets are relatively affordable, with median home values below the national median of $200,400,” Young said.