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Having More Formal Education Might Make You More Likely to Own a Home

Americans have more formal education than ever before. According to the U.S. Census Bureau, nearly 90% of Americans over the age of 25 have graduated high school, and about 33% have also received a college degree. These numbers have risen steadily over the past decade, and will likely continue to rise into the future.

From higher salaries to a reduced risk of unemployment, people with more formal education usually have an edge in the job market over those without high school diplomas or college coursework. And as Americans become more and more educated, average people need degrees more than ever in order to remain competitive with their peers. This is especially true in big cities, which often attract highly competitive and lucrative jobs in industries that place a high premium on education.

To better understand how higher education impacts the U.S. economy, LendingTree, the nation’s largest online loan marketplace, ranked the nation’s 50 largest metros by the percent of homeowners who have bachelor’s degrees or higher. We were able to get a better sense of the areas where formal education seems to play the biggest role in a person’s ability to buy a home.

Key findings

In each of the nation’s 50 largest metros, a solid majority of homeowners have at least some college education. An average of about 73% of owner-occupied homes in the metros featured in our study are owned by people who have some type of college education, even if they don’t necessarily have a degree.

Washington D.C., San Jose, Calif. and San Francisco are the metros where the largest portion of homes are owned by those who have a bachelor’s degree or higher. In these three metros, an average of 59% of owner-occupied homes are owned by someone with at least a bachelor’s degree.

Riverside, Calif., Las Vegas, and Louisville, Ky. have the lowest percent of homes owned by those with a bachelor’s degree or higher. In these cities, about one-third of homeowners have a degree. That being said, people with no college experience are still less likely to own a home than those who have at least some.

The Washington D.C., San Jose, Calif., and San Francisco metropolitan areas have the most college-educated adult populations out of the nation’s 50 largest metros. Nearly half of the adult populations in these metros have at least a bachelor’s degree or higher. From specialized government and lobbying jobs in Washington D.C., to tech jobs in San Francisco and San Jose, Calif., the most popular industries in these metros usually require their employees to have a significant amount of formal education. As a result, it’s no surprise that these metros attract large sums of highly educated individuals.

Riverside, Calif., Las Vegas, and San Antonio are the metros with the least college-educated adult populations. In these metros, an average of nearly 22% of adults have at least a bachelor’s degree. Based upon these numbers, it should come as no surprise that the industries that fuel these metros’ economies, like manufacturing in Riverside, tourism and gambling in Las Vegas, and the military in San Antonio usually don’t require as much formal education as other industries might.

While an area’s homeownership rate is influenced by how educated its adult population is, there are other factors that have a more significant impact.  For example, how affordable homes in an area are has a much greater impact on homeownership rates than the percent of people who have bachelor’s degrees or higher does.

Metros with the largest share of homeowners with at least a bachelor’s degree

Washington, D.C.

Total adult population: 4,678,886

Percent of adult population without a high school diploma: 9.7%

Percent of adult population with a bachelor’s degree or higher: 46.3%

Percent of homeowners without a high school diploma: 5%

Percent of homeowners with a bachelor’s degree or higher: 61%

Median income (2017): $97,148

Median home value (2017): $397,900

San Jose, Calif.

Total adult population: 1,519,252

Percent of adult population without a high school diploma: 12.3%

Percent of adult population with a bachelor’s degree or higher: 45.8%

Percent of homeowners without a high school diploma: 6%

Percent of homeowners with a bachelor’s degree or higher: 61%

Median income (2017): $105,809

Median home value (2017): $815,000

San Francisco

Total adult population: 4,704,106

Percent of adult population without a high school diploma: 11.3%

Percent of adult population with a bachelor’s degree or higher: 44.4%

Percent of homeowners without a high school diploma: 6%

Percent of homeowners with a bachelor’s degree or higher: 57%

Median income (2017): $92,714

Median home value (2017): $716,500

Metros with the smallest share of homeowners with at least a bachelor’s degree

Riverside, Calif.

Total adult population: 3,288,778

Percent of adult population without a high school diploma: 18.9%

Percent of adult population with a bachelor’s degree or higher: 18.5%

Percent of homeowners without a high school diploma: 14%

Percent of homeowners with a bachelor’s degree or higher: 29%

Median income (2017): $59,173

Median home value (2017): $293,800

Las Vegas

Total adult population: 1,612,686

Percent of adult population without a high school diploma: 15.1%

Percent of adult population with a bachelor’s degree or higher: 21.2%

Percent of homeowners without a high school diploma: 10%

Percent of homeowners with a bachelor’s degree or higher: 32%

Median income (2017): $54,882

Median home value (2017): $212,300

Louisville, Ky.

Total adult population: 985,436

Percent of adult population without a high school diploma: 11.2%

Percent of adult population with a bachelor’s degree or higher: 26.0%

Percent of homeowners without a high school diploma: 7%

Percent of homeowners with a bachelor’s degree or higher: 35%

Median income (2017): $54,624

Median home value (2017): $155,700

How does education impact an area’s homeownership rate?

One way to test whether or not one variable has an impact on another is to look at how correlated those two variables are. A positive correlation means that if one variable increases or decreases, then the other variable will also increase or decrease. A negative correlation means that if one variable increases, then the other will decrease — and vice versa.

For example, the correlation between the percent of a metro’s adult population without a high school diploma is negatively correlated to the rate of housing units that are owner-occupied in that area. In other words, the more people in an area who don’t have a high school diploma, the lower the number of owner-occupied households will be.

However, the relationship flips once homeowners earn their high school diploma. The correlation between homeownership rates and the percent of the adult population with a high school diploma only is positive.

The correlation is also positive when comparing homeownership rates to the percent of the adult population with some college education or an associate’s degree.

While correlation between homeownership rates and the percent of the adult population with a bachelor’s degree or higher is also positive, the correlation is much weaker than in the previous examples. Therefore, while having a bachelor’s degree or higher likely won’t hurt your chances of owning a home, it’s not as important as many other factors.

For example, the affordability of homes in an area (the ratio of median income to median home value) is positively correlated to that area’s homeownership rate. Factors like affordability are very important to consider when deciding on where to buy a home.

Why it matters to homeowners and homebuyers

While a person’s education likely will not be the deciding factor in whether or not he or she ends up purchasing a home, there is some relationship. Understanding education levels of the area you either currently live in or want to live in can have numerous benefits if you’re looking to buy a home.

As our study shows, people with more education are more likely to own a home. On top of that, our study also shows that more educated areas tend to be wealthier and have more expensive real estate. As a result, if someone is looking to purchase a home in a more educated area, they should be prepared to pony up a larger down payment or be willing to take on a larger loan. Furthermore, if a person wants to work in a highly educated area, they should understand that competition among job candidates can be tough, so they will likely need to be highly educated themselves.

Unfortunately, while being highly educated might be a necessity in some job markets, it can come at a high cost. The average student loan debt in 2017 was $37,172 per person, which adds up to a total of $1.4 trillion in total student loan debt in the U.S.  As one can imagine, being saddled with this level of student debt can make it difficult to accomplish tasks like buying a home. But this should not necessarily discourage someone from pursuing higher education, especially because, in many cases, the benefits outweigh the disadvantages. Furthermore, LendingTree makes it easier than ever to find a student loan provider or lender to help consolidate student loan debt. LendingTree can also help borrowers from all sorts of backgrounds, even those who have taken out a significant amount in student loans, find a mortgage that works for them.

Methodology

This study ranks the nation’s 50 largest Metro Statistical Areas, or “MSAs,” by the percent of owner-occupied households that are occupied by those who have at least a bachelor’s degree.

The data used in this study is based on estimates from U.S. Census Bureau’s 2017 American Community Survey. It should be noted that the data in the survey is estimated, so there is a slight margin or error of up to 5% for our data.

While the Census makes a distinction between adults aged 18 to 24 and adults aged 25 years or older, this study does not. As a result, the total populations of these two individual groups were added together and combined into a “Total Adult Population.”

The percentage of adults who belong to each individual educational category were calculated by dividing the total number of adults in said category from the total adult population in a given metro.

For the purposes of this study, correlation coefficients above .5 were considered statistically significant, while coefficients between .49 and .11 were considered potentially significant, and coefficients below .10 were considered not significant.

 


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