House Prices Are Not the Real Barrier to Millennial Home Ownership

By Steven John


After having experienced the most precipitous drop in modern times after the bursting of the housing bubble in 2007, American home prices are again near a peak high. This elevated market suggests a vast and ready pool of would-be home buyers, and as the last of the so-called Millennial generation enters the professional workforce, indeed there are plenty of aspiring homeowners out there.

But for far too many Millennials, homeownership will remain nothing more than an aspiration for years to come, and the primary reason many Millennials won’t be able to buy a home for years yet has little to do with actual housing prices. The real issue is the debt with which they are saddled from student loans.

In 1979, a year by which most members of the Baby Boom generation would have recently finished a four-year degree, the average cost of such an education in America was $2,577, according to the National Center for Educational Statistics. Thus a four-year stint at a college or university would have cost about $12,880. Today, the average cost for a year at a public college is $9,716 for an in-state resident, $21,629 for an out-of-state student, and $35,676 at a private college. Averaged together, those numbers are about $22,317 per year, or $89,260 for a full four-year education.

That figure represents a seven-time increase (6.93, to be precise) in the cost of a college education over the course of the last 40 years. By contrast, the average home value in 1979 was $71,800, according to the Census Bureau of the United States. In 2018, the last year for which relatively complete data is available, the average price paid for a house by first-time home buyers was $219,300.

Do the math, and you’ll see an increase of home prices of scarcely over three times their 1979 value versus today.

The mounting costs of an education mean crippling debt that leads to the delay of homeownership for Millennials, but the issue is far less black-and-white than simply owning a home or not owning a home. Delayed homeownership means more time spent renting, thus less time building the equity of a home which becomes not only residence but also investment. It often means a delay before having children, as well, which impacts lives in ways less tangible through a financial lens but no less impactful overall.

Home prices go up and down in cycles, and ever thus has it been and will it be. But until there is a correction in the cost of an education, homeownership will become a goal deferred for far too many young professionals who are met with an unfair burden of educational expense.

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