The progression of homeownership across the U.S. is declining and educational attainment is a leading factor in the direction of these numbers.
First American Financial Corporation's Homeownership Progress Index released Thursday determined that the falling homeownership progress in the U.S. shares a special correlation with education levels of consumers.
According to the report, the index declined 1.8 percent year-over-year, and is down 7.6 percent from the peak in 2005. In addition,the index is currently just 0.4 percent above the 25-year low point set in 1995.
"Homeownership's year-over-year decline in 2015 is no longer a story of economics and a housing crisis correcting the excesses of the mid-aughts. Tectonic demographic shifts taking place as the economy transitions from Baby Boomers to Millennials are causing homeownership rates to transition, too," said Mark Fleming, Chief Economist at First American. "Increasing educational attainment levels will improve the prospect of achieving the American Dream in the long-run, but the timing of important lifestyle decisions will have significant impact on homeownership in the near term."
According to the report, people with higher education levels are more likely to earn higher incomes and own homes. First American ultimately determined that educational attainment and income level are key to homeownership.
Households in which at least one member has a bachelor's degree has increased 24 percent since 1991, and is expected to increase further as millennials graduate from college and enter the workforce, the report said. In 1990, the difference in homeownership rates among those without a high school degree versus those with a bachelor’s degree or higher was 15 percent. In 2015, however, educational homeownership gap has almost doubled to 28 percent. In addition, there is a 40 percent difference in the homeownership rate between those in the lowest income bracket versus those in the highest.
"It is no accident that the states and markets with growing educational attainment rates are also often the same places with significant improvements in homeownership levels," Fleming said. "Education is, as never before, a key to accessing the dream of eventually owning a home."
Fleming continued, "Homeownership is one of the most important tools for wealth creation, and the single largest source of wealth for most low-and middle-income Americans. The homeownership gap is widening by educational attainment level. Education is increasingly important to achieving the American Dream of homeownership, as home prices rise and qualifying for a mortgage in most cases requires good credit and consistent documented income. The good news is that educational attainment levels are improving nationally, so we are on the right track.”