Diplomas More Important Than Debt?
Young adults without a college diploma may face the greatest hurdles to owning a home, suggests new research based on a survey of 31,000 respondents.
College graduates between 18 and 34 without student loan debt will need just over five years of additional savings to afford a 20 percent down payment for a starter home (defined in the study as the median home at the bottom third of the market), according to new research released this week by Apartment List, a rental listing website. For college grads with student loans, it’ll take about 10 years.
But for young adults who haven’t graduated from college, the wait to buy a home could take up to 15.5 years, the study shows. (Note: Some mortgage loans available require lower down payments than 20 percent and could shorten the wait time.)
Regardless, “it’s really everywhere that people without college degrees won’t be able to afford homes,” says Andrew Woo, director of data science at Apartment List. “They could be stuck renting for a long time.”
Those without college degrees tend to have lower incomes (college grads make about $22,600 more than non-grads), but those without degrees also tend to get less help with down payments from family and friends, the study says.
Case in point, college graduates without student debt tend to get more than $8,000 of assistance with loans. College graduates with student loans expect to get nearly $4,000. But those without a college degree tend to receive just over $2,000, according to the study.
In some cities, the issue is particularly dire for non-grads. For example, in San Jose, Calif., a young adult without a college degree would need to save for 48 years to afford a 20 percent down payment on a starter home there. College grads with student debt would need to save for 15 years, and college grads without debt would need to save for about 4.5 years.
Source: “Homeownership Elusive for Adults Without Degrees,” The Wall Street Journal (May 23, 2016) [Log-in required]
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