Homeownership by Education: Degree-Holding Owners Surge as Those Without High School Drop 30%

Despite the costs associated with college and growing student loan debt, a degree is a stepping stone to eventually becoming a homeowner. In 2020, we had 18% more bachelor’s degree holders compared to 2010, while the share of high school graduates dipped by 8% during the same timeframe. Consequently, the share of owners with at least a high school diploma rose as well.

Although there are 4% fewer owned homes in the United States than there were in 2010, an increasing share belongs to highly educated people. 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 Xers, 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.

Point2 turned to 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. 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.

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.

• Washington, D.C. has the most homeowners with at least a bachelor’s degree, while Wyoming counts the most with an associate’s degree or similar.
• The median income of bachelor's degree holders ($56,150)  is more than double that of someone without a high school diploma ($25,350), leading to higher chances for better credit and a mortgage.
• More than 80% of individuals with degrees in Education, Industry, and Agriculture live in owned homes, while IT and Art grads are among the least likely to own a home (67% and 66%, respectively).
• Most homeowners live in Eastern and Midwestern states, including Maine, Minnesota, Delaware and South Carolina.
• West Virginia boasts the highest homeownership rate: 74%.

Degree-Holders Make Up Majority of American Homeownership; D.C. Homeowners Highest Educated

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%. 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.

Washington, D.C. is home to the highest percentage of homeowners with at least a bachelor’s degree: 76%. Conversely, it’s also the place with the fewest homeowners with an alternative degree, such as an associate’s (13%), making a traditional higher education path more common in a legal and political job hub like the District of Columbia.

The second-highest percentage of homeowners with bachelor’s degrees or higher live in Massachusetts (53%). Home to Harvard University, MIT, Tufts University, and more than 100 other institutes of higher education, Massachusetts is one of the most popular destinations to go to college, as well as to continue in postgrad.

Perhaps surprisingly, Wyoming claims the most homeowners with an associate’s or similar degree: 38%. Although the state doesn’t have many colleges (the third-lowest number after Alaska and Delaware), it does offer innovative degree programs. And, while the homeownership rate dropped or stagnated in the rest of the country, tax-friendly Wyoming and Hawaii were the only exceptions: In these states, the percentage rose by 1% and 2%, respectively.

As the second-most affordable state for homebuyers (after Mississippi) and with a median home value of $115,000, having a home in West Virginia is an attractive option regardless of educational background. In fact, West Virginia has the most homeowners with a high school education: 38%. Meanwhile, despite having the smallest percentage of homeowners with a bachelor’s degree (25%), West Virginia had the highest increase of homeowners within this educational bracket. The 10th-smallest state also has 44 institutes of higher education and also offers access to hailed colleges in neighboring states like Pennsylvania, Virginia, or Ohio: University of Pennsylvania, Johns Hopkins University, the University of Virginia, and The Ohio State University.

Education Level Influences Income, But So Does the State One Lives In

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.

For comparison, those with a bachelor’s degree in Montana earn the least within their educational bracket (just over $42,700). But, that’s still more than the highest median income of someone with a high school diploma ($37,900 in Massachusetts) or no high school education ($30,800 in North Dakota).

Once again D.C. sets itself apart, this time with the highest income among bachelor’s degree-holders at almost $71,850. The second-highest median income for degree-holders is about a three-hour drive away in New Jersey at $67,850. As for those with an associate’s or similar degree, Alaska and Maryland offer the highest median income within this education segment: $45,900 and $45,400, respectively.

Education & Agriculture Grads More Likely to Own a Home Than IT Degree-Holders 

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.

As Homeownership Drops Nationwide, Eastern States Count Most Homeowners

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 mid-Atlantic region showcases the two extremes in homeownership: West Virginia has the highest share of homeowners (74%), and District of Columbia has the lowest at 43%. In fact, the densely-populated East Coast is popular among homeowners, whether in tax-friendly states in the Northeast such as Maine or New Hampshire, or in the more affordable Southeastern ones like Alabama or Mississippi.

The states with the most homeowners overall are in the East and Midwest, with a few Western outliers, like Wyoming and Idaho.

Expert Opinions

For more on how homeownership is increasingly driven by educational and income levels, we looked beyond the data for advised opinions. Here is what our experts had to say on what higher educated people can expect from the market and the role of a degree in attaining homeowner status:

Randal Ice Barnabas Professor of Finance University of Central Oklahoma

The share of homeowners without high school education dropped by 30% in the last decade. In your opinion, what might have contributed to this? Overall, education levels are rising, but housing is also becoming more expensive, particularly in some markets. As education is closely correlated to income, the higher the prices get, the more the poorly educated are locked out of the market and forced to rent. Of course, this has other impacts, including less lifetime wealth and more frequent relocations among renters. 40% of American homeowners have at least a bachelor's degree, following an 18% increase since 2010. Do you believe this trend will continue by 2030, with homeownership becoming mostly accessible to highly educated people? It is likely that in the overall population, the level of education will continue to increase, as more high school graduates are going to college. Moreover, the percentage of the population with a college education will increase as many of those who are passing grew up in a period where a college degree was rare. Homeownership is impacted by education levels in society. Those who are better educated generally have higher incomes and can therefore afford to buy a home. Surveys also show that those who pursue degrees that are more geographically stable tend to own homes at a higher rate. For example, teachers generally stay in one area and buy a home, but those in high-tech fields are more likely to move and more likely to rent. There are also many regional differences to homeownership, and of course, home prices are always a factor, with more expensive markets having higher rental levels. The end result will likely be an increase in homeownership by those with more education. This will, in turn, build wealth and make these families more financially successful than those who are poorly educated.

Robert M. Silverman Professor of Urban and Regional Planning School of Architecture and Planning University at Buffalo

The share of homeowners without high school education dropped by 30% in the last decade. In your opinion, what might have contributed to this? Two trends help to explain this. First, the proportion of the US population that falls into this category declined during the last decade. So, the pool of potential homeowners who have less than a high school education got smaller. There is also a cohort effect since millennials have higher educational attainment as a group when compared to previous generations. This means that people at the age when they start to buy homes were more educated than in the past, so even fewer of them were in the less than high school education category. Second, educational attainment is highly correlated with income. In the last decade, having less than a high school education was correlated with a shrinking income in a relative sense. In the past, this group had access to more living-wage and higher-paying jobs in manufacturing and other industries. Today, many of these opportunities to earn higher wages when a person lacks a high school education have declined. So, the group is smaller, and there are a smaller proportion of people in it who have sufficient income to become homeowners. 40% of American homeowners have at least a bachelor's degree, following an 18% increase since 2010. Do you believe this trend will continue by 2030, with homeownership becoming mostly accessible to highly educated people? Yes. The close relationship between educational attainment and income will reinforce this trend. Increasingly, having a college degree or training in a skilled trade after high school is requisite to gaining access to jobs that have wages high enough to save for a down payment for a house and afford a mortgage. Part of this trend is linked to the credentialing of the workforce. Better paying jobs that used to only require a high school have either disappeared or now require some post-high school credentials. The other part of this trend is related to rising prices for homes, particularly entry-level homes that first-time buyers purchase. In general, people need more education to earn enough to buy a home, and housing prices have increased simultaneously.

Carly Urban Associate Professor of Economics Montana State University

One potential explanation for the increased gap in homeownership across those with and without bachelor's degrees from 2010 to 2020 is the aftermath of the Great Recession. Those without college degrees were more likely to suffer from job loss and long-term unemployment. Pairing employment shock with the housing bust, experiences with foreclosure may have disproportionately scarred those with less education. This would leave former-homeowners without college degrees with a bad taste in their mouths about homeownership in general. Picture for a second a homeowner without a BA, who was laid off, had trouble securing a new job, and lost their home because they couldn't continue to make mortgage payments. Even after that person has secured a new job, they may not be ready--and their credit score may not be ready--to jump back into the housing market. Whether or not the trend continues depends primarily on two forces: the labor market and the housing market. The value of and return to a college degree, even with rising costs, are high. However, the current tight labor market has pushed employers to reduce education requirements in some job descriptions. Reducing barriers in job postings further helps to recruit diverse candidates. If the labor market no longer rewards college degrees at the same rate, homeownership may become more accessible for those who end their education with a high school diploma. At the same time, house prices are hitting record highs in some areas. That means even with expanded opportunities for those with less education, the income levels required to buy the limited supply could be a stretch. While house prices are likely to level back off in the next decade, affordability for those earning less will require a larger drop in prices in many markets cross-country.

Erick Eschker Professor of Economics Cal Poly Humboldt

The share of homeowners without high school education dropped by 30% in the last decade. In your opinion, what might have contributed to this? This is probably due in part to a return to normal after the historic housing boom of the 2000s. Homeownership rates were the highest ever, and the red-hot housing market drew in more young and single people, and also more people with less education. The housing bust that followed saw record foreclosures and ownership rates plummeted as quickly as they rose. The reduction in homeowners without a high school education is a reflection of the fact that this group bought more houses during the boom but today buys at a more traditional rate.

David Turcotte Research Professor in the Department of Economics UMass Lowell

The share of homeowners without high school education dropped by 30% in the last decade. In your opinion, what might have contributed to this? The main driver of this trend is economic in nature. Inequality in the United States has grown over the last decade. In addition, the number of good-paying jobs within the economy for those without a high school education has continued to decline. The foreclosure crisis also impacted homeowners without a high school education disproportionately, as many were victims of predatory lending and lost their homes. Further, income gains by individuals without a high school education were well below the increases in home prices over the last decade; consequently, many of these individuals have been priced out of the market. 40% of American homeowners have at least a bachelor's degree, following an 18% increase since 2010. Do you believe this trend will continue by 2030, with homeownership becoming mostly accessible to highly educated people? Yes, unfortunately, I believe this trend will continue into 2030. First, the supply of housing units has not kept pace with population growth in most regions of the U.S. For example, my state of Massachusetts had only 4.5% more housing units in 2020 than in 2010, according to Census data, but the population grew by 7%. It is projected that this trend of lagging housing supply will lead to increased housing costs, making homeownership less attainable for individuals lacking a high school diploma. A case in point, the median owner-occupied home value in 2010 was $395,000 and increased to $581,000 in Boston by 2020. The pandemic and the resulting decline in mortgage interest rates has accelerated increases in housing prices and compounded the housing affordability challenges for those without a high school education. As a result, homeownership will be primarily accessible for highly educated people making adequate incomes to purchase a dwelling.

James Philpot Associate Professor in the Department of Finance and General Business Director of the Financial Planning Program Missouri State University

The share of homeowners without high school education dropped by 30% in the last decade. In your opinion, what might have contributed to this? There has long been a strong relationship between education level and subsequent income. It could well be that this relationship is strengthening and driving the housing results. However, accessibility to higher education (distance learning, financial aid, etc.) is likely at an all-time high, allowing more people to complete degrees. Regardless of cause/explanation, the result is the same: finishing high school is imperative.

Methodology

• • Owner and renter occupation data by education is according to Census 5 years estimates (2010 & 2020). The breakdown eliminates vacant, unoccupied units.
  • Homeownership rates used are equivalent to the shares of owner-occupied homes across the United States. Census considers a housing unit as being ‘owner occupied’ “(...) if the owner or co-owner lives in the unit, even if it is mortgaged or not fully paid for. All other occupied units are classified as ‘renter occupied’, including units rented for cash rent and those occupied without payment of cash rent”.
  • Education and tenure per person weight used as per ACS 5-year estimates 2019.
  • For the purpose of this study, we considered educational attainment among the American population aged 25 years and older.
  • Domains of activity (first degree only) were grouped as follows: Agriculture, Art, Communication & Mass Media, Education, Engineering, Finance/Business/Management, Health, Industrial/Technology, IT, Language, Legal, Marketing & E-Commerce, Political, Psychology, Public Services, Science, Social Science, and Other.
  • Median income is as per ACS 5-year estimates 2020. Certain values in the text have been rounded for simplicity.

Fair use and redistribution

We encourage and freely grant permission to reuse, host or repost this article. When doing so, we only ask that you kindly attribute the authors by linking to Point2Homes.com or this page, so that your readers can learn more about this project, the research behind it and its methodology.

For an overview of the real estate market in some of the main cities in the states mentioned in the study, visit the links below:

Missoula Real Estate
Minneapolis Real Estate
Newark Real Estate 
Philadelphia Real Estate
Pittsburgh Real Estate
Seattle Real Estate
Wilmington Real Estate