How Much Difference Does Education Make in Homeownership Rates?

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The conventional wisdom says that the more education people have, the higher their income. And higher incomes generally increase homeownership rates. The rule is if you want to own a home, go to college and graduate.

A recent study by real estate information website Trulia Inc. (NYSE: TRLA) reports some data backs up the conventional wisdom. The study also notes that there remain opportunities for homeownership for Americans without college degrees in certain areas of the country.

In addition to rising levels of income having a direct effect on homeownership, so do people’s age and career stage. Young people in the early stages of a career earn less and own homes at a lower rate than  older people who typically earn more and are at a later stage in their careers. No surprise there.

Here’s how national homeownership rates break down by income and highest level of education:

No high school diploma
>Median income: $26,874
>Homeownership rate: 40.5%

High school diploma
>Median income: $48,842
>Homeownership rate: 56.4%

Bachelor’s degree
>Median income: $82,202
>Homeownership rate:67.3%

Graduate degree
>Median income: $98,772
>Homeownership rate: 73.6%

Doctorate degree
>Median income: $117,684
>Homeownership rate: 73.7%

Professional degree
>Median income: $134,680
>Homeownership rate: 76%

A high school diploma nearly doubles a person’s median income and raises the likelihood of homeownership by 16 percentage points. A bachelor’s degree nearly doubles the median income of a high school diploma and raises the likelihood of homeownership by 11 points.

A professional degree (doctor, lawyer, MBA) earns the highest income and more than 75% of these degree holders own their own homes.

Trulia also looks at the difference between those without a bachelor’s degree and those with a degree at different stages of their careers:

Early stage (22 to 35 years old)
>Median income: no BA, $39,045;  BA, $74,843
>Ownership rate: no BA, 25%; BA, 42%

Mid-career (36 to 49 years old)
>Median income: no BA, $51,559; BA, $106,328
>Ownership rate: no BA, 49.2%; BA, $73.4%

Experienced (50 to 63 years old)
>Median income: no BA, $53,000;  BA, $105,387
>Ownership rate: no BA, 63.8%; BA, 82.2%

Retired (63 and over)
>Median income: no BA, $34,040;  BA, $71,182
>Ownership rate: no BA, 68.4%; BA, 81.2%

Trulia also noted several U.S. cities/metropolitan areas where homeownership rates are high without a college degree:

  1. Long Island, New York: 71.5%; median home value, $418,563
  2. Warren, Michigan: 67.5%; median home value, $186,940
  3. Daytona Beach, Florida: 67.1%; median home value, $176,028
  4. Grand Rapids, Michigan: 66.7%; median home value, $163,311
  5. Gary, Indiana: 66.4%; median home value, $145,267
  6. Camden, New Jersey: 65.2%; median home value, $181,283
  7. Sarasota, Florida: 65.1%; median home value, $239,240
  8. Montgomery, Pennsylvania: 64.4%; median home value, $300,624
  9. Pittsburgh, Pennsylvania: 63.8%; median home valued, $129,865
  10. Allentown, Pennyslvania: 63.1%; median home value, $182,606

The Trulia report includes an interactive chart with data on 100 U.S. metro areas.