You’d have thought having a college degree would make it easier to buy a home, but according to an article in CNN Money.com it can actually make it harder. Purchasing a property does require the lot of money and a new study has found that in 30 out of the top 100 markets in the country, saving for that down payment is quicker without a college degree.
The study by Trulia found that in these markets households with a college degree don’t really make much more income than households without a college degree. This is largely due to the burden of student debt which slows down any plans to save for a down payment.
Buying a home is probably the biggest purchase that most people will make but there has been a distinct lack of buying activity amongst Millennials. Although going to college usually means higher lifetime earnings, large student loans can eat away at any savings and make it much slower to save for a down payment. Those millennials who don’t have a degree are able to save for a down payment at least one year sooner than millennials with college degrees in Daytona Beach, Florida, Las Vegas, El Paso, Texas, and in Columbia, South Carolina.
There is one state where things are quite different and that’s California where it is particularly tough to buy a property. Some seven out of 10 of the property markets where it will take the longest to save for a down payment are situated in California. This is where having a degree will actually be an advantage as the income premium for anyone with a degree is higher in this state.
Even so, the timeframe required to save for a down payment can be quite staggering. San Francisco is seeing price increases into the double digits and it’s estimated it will take 25 to 30-year-olds who have a college degree nearly 30 years to save for a 20% down payment on an average priced home. Potential buyers without a degree will find it nearly impossible to save the cash.
There are other areas that are much more affordable as it will take those with college degrees just 4.1 years to save up for a down payment in Detroit and in many markets it will take less than seven years, regardless of whether or not they have a degree. Ohio is one of the most affordable options.