A College Degree is Key for Millennial Homeownership in the San Francisco Bay Area, say my friends at Trulia. They just shared this with me (after a few edits to my liking), so I’m sharing it with you.
To go to college, or not? This is one question many millennials ask themselves. For households between 25 – 30 years of age who want to live in California’s major metros the answer is GO! A recent Trulia study found, it takes almost 20 years for degreed millennials to save the 20% down payment in San Jose, Los Angeles, Orange County and San Diego. For millennials without a degree, they need to save for decades. In San Jose, the amount of time is 45 years.
The landscape in San Francisco is daunting even with a degree. It takes a whopping 29.5 years with a degree and without it is 50+ years.
Where Saving For a 20% Down Payment Takes Decades
| With College Degree | Without a College Degree | |||||
| # | U.S. Metro | Years Needed to Save for Down Payment | Required Down Payment at time of purchase | U.S. Metro | Years Needed to Save for Down Payment | Required Down Payment at time of purchase |
| 1 | San Francisco, CA | 29.4 | $560,590 | San Francisco, CA | Not Possible | N/A |
| 2 | Los Angeles, CA | 18.8 | $196,616 | San Jose, CA | 45.4 | $665,508 |
| 3 | Orange County, CA | 18.5 | $235,959 | Los Angeles, CA | 39.9 | $353,270 |
| 4 | San Diego, CA | 17.7 | $192,081 | Orange County, CA | 32.3 | $347,842 |
| 5 | San Jose, CA | 17.7 | $289,072 | San Diego, CA | 29.0 | $262,589 |
| 6 | Honolulu, HI | 16.0 | $165,588 | Oakland, CA | 27.3 | $267,605 |
| 7 | Oakland, CA | 15.6 | $193,453 | Ventura County, CA | 22.9 | $230,929 |
| 8 | Ventura County, CA | 15.5 | $189,325 | New York, NY | 20.2 | $149,905 |
| 9 | Denver, CO | 14.3 | $125,314 | Fairfield County, CT | 20.1 | $185,494 |
| 10 | Cape Coral–Fort Myers, FL | 13.3 | $74,130 | Honolulu, HI | 18.0 | $173,574 |
In the study of 250 major metropolitan areas California swept the top 5 spots for number of years to save for a 20% down payment (Honolulu, HI was 6th, Oakland was 7th & Ventura County was 8th).
San Francisco tops the list, requiring 29.4 years with a college degree and 50+ years without it. Los Angeles comes in second, requiring 18.8 years with a college degree and 39.9 years without. San Jose and San Diego are not far behind, requiring 17.7 years with a college degree, but it takes much longer without a college degree for San Jose (45.4 years) than San Diego (29 years). The numbers for Orange County is 18.5 years with a college degree and 32.3 without.
Source: http://www.trulia.com/trends/2015/07/millennial-down-payment
What are Bay Area millennials to do? Consider a 10% down payment. Saving for the down payment can be done in less than half the time. How is this possible? Because price appreciation outpaces income growth for this group. Millennials without a college degree in San Francisco will actually be able to save a 10% down payment in 28.5 years, compared to not being able to save for a 20% down payment ever. San Francisco millennials with college degrees are able to attain a 10% down payment in 13.7 years, compared to 29.4 years for a 20% down payment.
In other Bay Area metros, the time to save for a down payment is significantly less as well. The time plummets from 45.4 years to just 15.4 years for San Jose millennials without a degree and with a degree it drops from 17.7 to 9.3 years. In Oakland, millennials without a degree the time needed to save goes from 27.3 to 11.3 years and with a degree it drops from 15.6 to 8.8 years.
In summary, a degree will get Bay Area millennials into a home by their forties if they opt for a 20% down payment. By choosing a 10% down payment both the degreed and non-degreed can enjoy the benefits of homeownership considerably sooner.
When you are ready to buy, browse Trulia all you want for the perfect home, but hire a professional, like me, to help you win.