- Millennials tend to prioritise graduating from college over buying a house, a new First American study found.
- The gap between college-educated and non college-educated Americans who are also homeowners nearly doubled between 1997 and 2017, according to First American’s analysis.
- Other things that contribute to a rise in potential homeownership demand include income growth, unemployment, and marriage.
That’s according to new research from First American, which found that young adults today aren’t giving up on homeownership, they’re just getting there later.
First American measured “potential homeownership demand” as part of its Homeownership Progress Index, or HPRI. Rather than track how many people own a home, it tracks the change in homeownership over time, accounting for shifts in economic, social, and lifestyle trends to find out the likelihood of homeownership.
Interestingly, despite the high cost of college and the growing burden of student loan debt, obtaining a college degree is a strong indicator of later becoming a homeowner, the study found.
Between 1997 and 2017, the gap between the rate of homeowners with a college degree and those without a high school diploma grew from 11.3% to 20.5%, according to First American’s analysis. While the homeownership rate for college-educated homeowners fluctuated over the two decades, it started at about 68.5% and was at that same level in 2017. The share of homeowners with no high school diploma, however, dropped just over 9%, from 57% to 48%, during the same time period.
“Millennials’ lifestyle and economic decisions are some of the main reasons we currently have a lower homeownership rate than expected, based on our HPRI,” Mark Fleming, chief economist at First American, said in the report. “Yet, it is reasonable to expect homeownership rates to grow as millennials continue to make important decisions, including attaining an education and, later in life, getting married and buying a home.”
Fleming said marriage is “strongly correlated” with buying a home, and that the homeownership rate among married couples is a full 30 percentage points higher than it is for non-married people. Overall, potential homeownership demand among all Americans grew 1.1% from 2016 to 2017, but is still below the true homeownership rate.
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