Despite the costs associated with college and growing student loan debt, a degree is a stepping stone to eventually becoming a homeowner, according to a new report from Point2, an international real estate research portal.
There were 18% more bachelor’s degree holders in 2020 compared to 2010, while the share of high school graduates dipped by 8% during the same timeframe. Consequently, homeownership rates rose among people with a level of education above a high school diploma.
Although there are 4% fewer owned homes in the United States than there were in 2010, homeownership among highly educated people has grown steadily since. And with millennials cementing their status as a driving force during the last decade, the life priorities of this pragmatic generation are reflected in the socio-economical makeup of today’s United States. Compared to baby boomers and Gen X’ers, millennials are more prone to postponing traditional life decisions – like starting a family and buying a house – in favor of gaining education and financial independence first.
So while factors such as mortgage fluctuations or housing market volatility may explain the nationwide inability to own a home, this generational shift could answer for the increased ability of those with a degree.
Since 2010, the share of homeowners with a bachelor’s degree in Iowa increased by 21%, while those without a high school education decreased by 36%, according to the report. Other Iowa-specific findings:
- Iowa has the eighth highest share of homeowners overall (71%);
- The state also ranked eighth with the highest share of homeowners who hold a high school diploma;
- Nonetheless, Iowa is third with the highest median income for those without a high school diploma ($30,147) compared to the national median of $25,351;
- 85% of those with a degree in education and finance, as well as over 83% of those with a degree in health and marketing, are likely to own a home in Iowa, compared to just over 74% of IT grads;
- In 2020, Iowa had 20% more bachelor’s degree holders compared to 2010, while the share of high school graduates dipped by 10% during the same timeframe.
The study used the latest U.S. Census data to pin down the correlation between an individual’s education level and their chance at homeownership in the U.S. The findings highlight the idea that the higher the education, the higher the income, and the closer one gets to the American dream of homeownership.
In the U.S., 40% of homeowners have at least a bachelor’s degree, while 30% have some college or an associate’s degree, putting degree-holding homeowners at 70% in the United States. Alternatively, 23% have a high school diploma and just 7% of American homeowners have less than a high school education.
Notably, since 2010, the share of homeowners without a high school education has dropped by 30%, while those with a bachelor’s degree has increased by 18%, according to the Point2 report. These declines in homeowners with a high school education (down 13%) or less than a high school diploma indicate that the American dream is more likely to become a reality for degree-holders. As such, education is key to eventually owning a home and is linked to high income levels and a higher likelihood to land a mortgage despite student loans. Educated individuals who are seeking a loan are also more attractive candidates to lenders.
It’s worth noting that the median income in an owned household (nearly $81,400) is almost double that of rental households ($42,150) in the U.S. Granted, that’s not to say that homeowners necessarily earn more than renters. Rather, more renters tend to live alone compared to homeowners, who typically move in as couples or with family in tow.
Even so, there are disparities in median personal income when we consider education attainment among homeowners. In particular, the median income of an individual in the U.S. with a bachelor’s degree is more than double that of someone without a high school diploma. That’s almost $56,150 versus $25,350.
It’s not just the level of education, but the right qualifications that can influence someone’s homeownership plans. In other words, certain degrees — commonly in health or business— are associated with higher incomes and, therefore, increased potential of owning a home.
However, there are also professional fields that eschew relocation, require more home stability, and offer fewer remote options compared to others. This might explain why, despite the income gap, those with a first degree in Education are more likely to own a home compared to, say, IT professionals who don’t have to settle down due to work reasons.
In fact, Census data shows that a whopping 82% of people with a first degree in education are likely to live in an owned home, followed by those specialized in industry/technology (81%) and agriculture (80%). And while the latter professions are likely to keep you on your feet, they don’t usually require relocation, thereby encouraging investment in a personal home. By comparison, just 67% of IT and communication and mass media degree holders and 66% of art grads live in an owned home. Notably, these particular fields are known for their dynamic nature and for producing digital nomads who may prefer to rent.
In the U.S., 64% of homes are owned. And despite a 4% decrease nationwide since 2010, owned homes make up at least 60% of the residential units in 47 states (70% or more in 12 of these states).
The states with the most homeowners overall are in the East and Midwest, with a few Western outliers.
