Millennial Homeownership Rates Have NOTHING to Do with Student Loan Debt

While browsing Reddit yesterday, I happened upon a post about how “millennial home ownership shrinks as student debt grows”. When I first saw it, the post was near the top of Reddit’s front page. When I took the screen cap below, it had 13,700 upvotes and nearly 3600 comments. I wouldn’t be surprised if it’s over 15,000 upvotes by now.

Bullshit Article with Lots of Reddit Upvotes

The source article — written by “Fred” at — makes the following argument:

At the beginning of 2016, the home ownership rate for those 30 and under sat at about 27.7%, the lowest it has been in decades. On the other hand, student loan debt rose to $1.2 trillion, though it has already surpassed the $1.3 trillion mark earlier this year. In a development which should surprise nobody, there seems to be a pretty clear correlation between the growing student loan debt Americans hold and the under 30 home ownership rate.

The article is accompanied by this graph:

Financeography Homeownership Chart

The implication is that there’s a strong negative correlation between student loans and the ability for young adults to purchase a home. (A negative correlation means that as one of these variable increases, the other decreases. They move in the opposite directions.) Or, as the Reddit post claimed: “Millennial home ownership shrinks as student debt grows.”


This is a bullshit article using bullshit stats to reach a bullshit conclusion. It’s the latest in a long line of “millennials have it rough” stories that drive me nuts because:

  1. Their conclusions are false.
  2. They give tacit permission for young folks not become boss of their lives. (If things are so shitty, then it’s not their fault they can’t get ahead. Right?)

This article is crap, and it’s crazy that so many people find it compelling. Although I know I should let it slide — “OMG SOMEONE IS WRONG ON THE INTERWEBS!” — I devoted most of my Sunday to researching and writing a rebuttal.

Here’s my thesis: There’s no connection between student loans and homeownership rates. There’s certainly no negative correlation between the two. In fact, as we’ll see, there’s a moderate positive correlation. (But that correlation is meaningless.) Average student debt has actually plateaued and is declining, and homeownership for young adults is moving lockstep with most of the rest of the United States.

In short, Reddit and Financeography are dead wrong. Let’s look at why.

Homeownership Rates for Millennials

It took some digging, but I think I found the homeownership data used by Financeography.

On the U.S. Census Bureau Vacancies and Homeownership page, you can download a spreadsheet containing annual estimates of the housing inventory by age of householder (from 1982 to present) [37K Excel document]. Financeography grabbed a subset of the data. Their graph only shows homeowners under age 30, which is fine. But the graph is misleading because it only shows numbers since 2005, which is when homeownership was peaking for young adults (and everybody else).

Using the Census Bureau spreadsheet, I manually collated the data for people under 30 — but I went back to 1982, which is the first year for which the government has numbers. Here’s the base table, which includes the number of households headed by somebody under 30 (in 1000s), the number of homeowners under 30 (in 1000s), and the derived homeownership rate:

Homeownership Rate for Young Americans

And here’s the full graph of the homeownership rate for young adults, from 1982 to present:

Homeownership Rate for Americans under 30

Looks a bit different, doesn’t it? When you’re not trying to lie with your statistics, you get a different picture. Yes, fewer folks under 30 own homes than they did ten years ago, but can you think of another reason this might be the case? A reason that doesn’t involve bullshit connections to student loans?

For added context, here’s a U.S. Census Bureau graph of homeownership rates in the U.S. for the same time period (divided by age group):

Homeownership Rate for Americans (age specific)

Homeownership rates have declined for everyone — not just millennials. In fact, young adults might not be the group that’s been hit hardest. (It looks like 45-54 year olds had a decline that’s at least as steep, although I didn’t calculate percentages to be certain.)

The decline in homeownership for millennials appears to be part of a natural cycle. And it’s certainly tied to homeownership in the country as a whole.

But what about student loans?

Average Student Loan Debt Per Person

Long-term historical data on student loan debt was almost impossible to find. The Federal Reserve Bank of New York has a couple of publications available online with info back to 2003. (That’s the data Financeology used to create its graph.) That’s because, according to a footnote in this Fed report, student loan reporting to credit bureaus before 2003 was unreliable.

So, we’re going to use a stand-in dataset. (Which is okay, I think. “Total student loan debt” doesn’t seem like a meaningful statistic. It’s like talking about home prices while citing the total value of the real estate market. It makes no sense.)

For my analysis, I’ve used data from the College Board, the non-profit group best known for administering the SAT exam. The organization also has a wealth of data related to student borrowing patterns since 1970. (In fact, it’s the only such dataset I was able to locate.)

For instance, here’s a recent table showing average aid per student over time (with data running from 1972 to present).

Once again, I downloaded the Excel spreadsheet with raw numbers in order to create my own table. Here’s the average amount of loans (from all sources) per full-time equivalent student (FTE) in 2015 dollars:

Average Student Loans per FTE Table

If you read background behind these numbers, student loans increase when the government makes new loan programs available. In 1994, for example, a new direct lending program was introduced. Borrowing jumped. (It doubled in two years!)

Today, the average full-time student does take roughly $7500 in loans every year. That’s a total of about $30,000 during a four-year college career. That’s a lot, no doubt. Whether that much education debt is good or bad is a debate for another day.

Here’s a full graph of this data:

Average Student Loans per FTE Graph

I hope you’ll agree that it makes much more sense to look at the average loan amount per student than the total outstanding debt for the entire country.

When you examine student loans per peson, you get a completely different picture than if you focus on the total student loan debt in the United States. While the latter may be increasing — perhaps because more kids are going to college? — the former has experienced a modest decline after a longer plateau.

The Bottom Line

Now let’s get geeky.

In statistics, correlation coefficients measure the degree to which two variables are related. A correlation coefficient can range from -1.0 to 1.0.

  • If its value is 1.0, that means there’s a perfect positive relationship between the two variables. As one moves up, the other moves up with it.
  • If the value is -1.0, there’s a perfect negative relationship between the variables.
  • As one moves up, the other moves down. A correlation coefficient of zero means there’s no relationship between the two variables.

The graph from Financeography shows a strong negative correlation between total student loan debt and homeownership rates for young adults, but only for the years between 2005 and 2015.

Financeography Homeownership Chart

But this graph is telling a story that doesn’t exist. Or, more precisely, a story that doesn’t matter. Worse, it’s only providing a single chapter from that story.

If you look at the bigger picture — data from 34 years instead of 11 — and you choose to look at numbers that matter, the results are much different. Here’s a graph I made that combines two variables from 1982-2015: the homeownership rate for people under 30 and average loans per FTE.

Comparing Homeownership to Student Loan Burden

When you calculate the correlation coefficient for the actual numbers in my graph, you get a modest positive correlation: 0.46. This isn’t strong by any means, but it is positive. As homeownership rates rise, so too do student loans. As student loans decline, so does the homeownership rate.

That’s totally different than what Financeography would have you believe, isn’t it?

Here’s the bottom line: Just because somebody cites some stats, that doesn’t mean they’re accurate — or that the correlations they’re trying to draw are actually meaningful. (Or that correlation implies causation.)

And just because something makes it to the front page of Reddit, that doesn’t mean it’s true. It just means redditors wish it were true.

I spent six hours researching and writing this article. There’s a lot of material that didn’t make the final edit, and some of you money nerds might find it interesting. For example, the U.S. Census Bureau maintains a website with all sorts of info on homeownership. They recently released their latest quarterly report on residential vacancies and homeownership [PDF]. At the website for the Federal Reserve Bank of St. Louis, you can explore tons of data related to housing. For instance, you can create (and customize) your own graph of the U.S. homeownership rate from 1965 to today. Lastly, don’t forget my April article about the history of the U.S. housing market, in which I shared overall homeownership rates going back to 1890.

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There are 23 comments to "Millennial Homeownership Rates Have NOTHING to Do with Student Loan Debt".

  1. Kathryn says 12 December 2016 at 06:07

    This is seriously so interesting-I hadn’t thought of comparing the student loan debt to home ownership trends. So, do you think that the positive correlation coefficient could also be related to a relationship between home ownership and college education (specifically, if people that complete higher education tend to buy instead of rent)?

  2. Katasha Loves Tacos says 12 December 2016 at 07:59

    YOWZA – this was one well-researched, nerdy smack on the bottom! Take that, sensationalist stat manipulators!
    Out of curiosity – did you use Excel to calculate your correlation coefficient, or do you have access to software like Matlab or Stata?

    • J.D. says 12 December 2016 at 08:00

      I used Excel, which I know might be problematic. I don’t have access to anything fancy.

      • Matt Warnert says 12 December 2016 at 08:56

        I don’t think it is problematic at all. Until you start doing bigger data sets you are better off using Excel. Excel calculates the correlation coefficient the same as everyone else.

  3. Gwen @ Fiery Millennials says 12 December 2016 at 08:32

    But but but everyone knows every single Millennial is drowning in student loan debt and will be forced to live in their mom’s basement until they’re 40! You mean to suggest that’s not true!?! :O

    • Molly says 30 December 2016 at 09:30

      My husband and I are trying to get a home loan now. I am a teacher with a Masters Degree and have $75,000 in student loan debt. We both went to a public college and the debt is holding us back from owning a home. It is beyond frustrating!

  4. Matt Warnert says 12 December 2016 at 08:39

    Wow! JD this is awesome. I love the depth you went to for this article. What inspired you to look further into this issue? I wouldn’t have even thought twice to go check this out.

  5. Thehappyphilosopher says 12 December 2016 at 09:25

    Nice post JD. What would be interesting to me would be to see the relationship between home ownership and:

    1. Price to rent ratios
    2. Unemployment rate
    3. Interest rates
    4. Home prices

    Get writing 😉

  6. Joshua Sheats says 12 December 2016 at 09:44

    Great work, JD! This is the type of citizen financial journalism that we need more of!

  7. Eric says 12 December 2016 at 10:11

    Both charts are flawed. The home ownership rates you cited are across the entire population under 30 and the student loan rates are only for the average full time student, which are two different populations. If you multiplied the loan rate per FTS by the % of FTS in the college age population, that might give a more accurate picture.

    Of course the original data suffers from the same problems. As you stated, total student loan debt is a bad metric as it 1) includes the debts of those over 30, 2)Doesn’t account for a growing population which is accounted for in the home ownership rate.

  8. Bruce says 12 December 2016 at 10:20

    Millennial’s have opportunities I never thought possible and challenges I’ve never had to deal with. Just like every generation.

    • Eric says 12 December 2016 at 10:33

      This is a good post!

  9. Paul says 12 December 2016 at 11:15

    You are absolutely right about how ridiculous this article from Fred is. He is probably one of those millenials that racked up a huge student loan from a school he could not afford to attend. He probably had a great time for four years because he got an easy degree in a field without any prospects. And now he wants us to forgive his debts because he cant afford a house.
    Poor Fred.

  10. noelle says 12 December 2016 at 12:14

    This is an interesting post, and I agree that the original article you analyzed made gross errors. However, to suggest that the decline in home ownership is not in part affected by student loan rates I think is premature. For one, a given year’s loan rate does not impact the population’s ability to buy houses that year. Rather, the loan rates will impact the ability of those students to buy houses in 4-8 years (depending on if they attend grad school, etc.). So the impact of the student loans should be looked at further down the line, not just the year they occur. Also, as another commented mentioned, you would have to look at the population who attended college’s rate of home purchasing, not the nation as a whole, to get a clearer picture. Though I don’t know if that figure is even available.

    Lastly, anecdotally, I personally am someone who attended college starting in 2005, didn’t graduate, and am currently paying on a $50,000 loan balance (down from $75,000). I was fortunate to get a good paying job and am able to handle all my obligations and save a bit (and not live in my parent’s basement). However, my student loan debt payment is almost the size of a modest mortgage. If I didn’t have this debt, I absolutely would already be in a house. Without it, I would be able to save for down payments much faster as well as support a mortgage payment much easier. With it, saving is taking MUCH longer. In fact, I won’t be in a house before 30.

    Now, this isn’t a millenial whine. This is just one example. I accept responsibility for the choices I have made and understand why I am where I am today. But to hear you, JD, suggest that this permits millenials to blame the system and not become boss of their lives is a little hurtful. I’ve been reading you since you first started writing back in the GRS days and hadn’t known to you judge a large group of people like that. I am the boss of my life and am working toward goals. In fact, you taught me a large amount of what I know about personal money management (of which I am eternally grateful). But to imply that maybe the economic system of the nation isn’t creating unrealistic burdens and shouldn’t be fixed and that we should buck up and deal is an unfortunate perspective I think.

  11. Eric Estevez says 12 December 2016 at 12:15

    Do you think there is a shift in mindset within Millennials? Many of us are having families later and see no need for a mortgage until then. thoughts?

    Disclaimer: No research done to backup the above statement, lol

  12. Adam says 12 December 2016 at 12:45

    I’m a little skeptical, and I admit bias as a millenial.

    The original article is citing home ownership for “millenials” and starting the chart in 2005, which is perfectly fine. 2005 is a reasonable year to start looking at home ownership for “millenials”, who were born in the early 80’s at the earliest. J.D. is taking a broader look at home ownership for people under 30 vs. student loans, but looking at home ownership in 1982 has nothing to do with millenials.

    J.D. is also saying that average student loan debt is more important than total student loan debt, and that the average is declining. I would argue that 2 people with $50k each of debt has more effect on potential housing purchases than 1 person with $60k of debt.

    To say that home ownership rates for millenials has nothing to do with student loans is a bit of a stretch in my opinion. I know many people who still don’t own a home due to lingering student loans, or that delayed their home purchase until their student loans were paid off.

  13. dh says 12 December 2016 at 16:01

    JD, did you really have to use the word bullsh*t on a family blog? Kidding. 😉

  14. Full Time Finance says 12 December 2016 at 17:41

    I like the analysis. It just goes to show your assumptions often guide analysis results. If you assume post 2005 is normal you end up with one result. Yes I’m giving the original reporter the benefit of the doubt. Now to the underlying question. If I had to guess the decline in millennial home ownership is tied to debt, but not in the way the short run correlation denotes. Frankly across the housing spectrum we seem to be seeing a decline in the top end market while a simultaneous push to smaller houses. I suspect this is a cultural shift to more general expenditure caution across the generations as a result of 2009.

  15. Kevin Lewis says 13 December 2016 at 09:19

    Let me first say, that I have always liked your blogs and have read many many things that I agree with. I, however, am one of those annoying people who rarely comments unless they disagree. 🙂

    I didn’t read the article that you reference, and I have read enough of your blog to trust that it likely makes grandiose claims that the statistics don’t back up. However, I think your headline makes an even more grandiose claim that doesn’t make logical sense. University tuition costs have gone up 40% after accounting for inflation since 2005.
    At the same time, bankruptcy law has made student loans more difficult to discharge. Since the two largest costs people in this agegroup are likely to incur are the cost of college and the cost of a home, a 40% increase in the price of one should naturally lead to a decrease in the purchasing of another. To me, this is like research as to whether consumption of alcohol leads to more sexual activity in college students. The question is not if… but merely degree. People lie with stats all the time… but don’t lose sight of the big picture.

  16. Elizabeth says 19 December 2016 at 14:28

    I think this makes sense because the majority of people who have student loan debt have a college degree and those with a college degrees are more likely to buy a house – they’re more likely to have a job, have assets for a down payment, understand the investment value, etc.

  17. Steve says 24 January 2017 at 06:07

    If you don’t like this, never visit r/lostgeneration! No one in there wants to be a boss or their own life.

  18. Hannah says 20 February 2017 at 08:18

    I know I should leave this well enough alone, but it’s driving me crazy, so here’s my rant.

    Calculating a correlation coefficient between two variables in which one variable is a summary of a binary option is crazy misleading. It means nothing.

    I’m going to try to explain my position as clearly as possible. Since you’re a geek, I hope you’ll appreciate it.

    The question you’re attempting to answer is probably best stated as follows:
    Has the rise in student loan debt decreased homeownership among young people (millennials)?

    The opening poster on reddit found some trend data that at best indicated that this question is worth investigating.

    Instead of investigating to disprove, you found different trend data that indicates that the trend isn’t worth investigating. A valid argument, and one that I use often. However, you draw the conclusion that the trend pointed out by OP is a statistical lie. That’s too strong of a conclusion. After all, you used nearly the same analysis

    (admittedly breaking down homeownership by age group is more convincing, though not enough to claim that OP is a complete farce).

    So how should you investigate this?

    The first way to investigate this is to say, is it true?
    That is, do people with higher student loans have a lower probability of purchasing a home.

    The best way to investigate that question is survey data. Getting information like, what was your student loan debt upon quitting school, what was your opening salary, your current salary, did you buy a house within 5 Years of graduation, within 7 years of graduation, etc.

    Then, you can create a very simple regression analysis (single linear, ie correlation). Does the probability of purchasing a home within X years of graduation go down when student loans increase. Remember, we’re dealing with a binary option, so we have to create a correlation of probability rather than a correlation of trends.

    If that is indeed true, that people who have higher loans purchase less homes, and the variable is statistically significant (which we can measure because we created a simple linear regression), we can ask-

    Was that true say 20 years ago, or 30 years ago?

    Has the correlation coefficient changed?

    Alternatively, we could ask is the average student loan borrower less likely to buy a home today than 30 years ago because on average they have more debt?

    We would of course want to control for average wages, average house prices, etc. too which makes this more complex.

    Now, the data for this type of analysis is expensive, and only available upon request from FRED. It probably would require surveys of approximately 3K+ people per year, in a nationalized distribution.

    I put in a request for the data, since sometimes FRED allows that, but I’m not optimistic. I know that bankrate does a survey each year for the last 10-12 years that would also be robust enough for statistical validity. Not sure if it will prove enough since the time period is too short, but certainly worth considering.

    Anyways, you’re a smart guy. The problem isn’t with your intellect, or even with your thinking on the matter. It’s just that statistics is rarely a good tool to use bluntly. Actually, it’s a remarkably weak tool except with extraordinarily robust datasets. When you think about the ways that data science is being exploited today, it’s important to know that data scientists stand around in their cubes and say shit like, “Hadoop is taking 3-4 minutes to process 16 Trillion lines of data, doesn’t that seem slow? Is the problem with our data warehouse or my query?”

    • Dave says 18 May 2017 at 05:18

      What a great reply about how statistics are commonly misused by people who are not well versed in it.

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