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Education and the Intergenerational Transmission of Homeownership

September 14, 2016


Patrick Simmons & Gary Painter

As student loan debt has mounted and young-adult homeownership rates have fallen over the past decade, considerable attention has focused on the nexus among student loans, education, and homeownership. Recent analyses suggest that the benefits of attaining a college education outweigh the downsides of student loan debt when it comes to achieving homeownership.1

Although valuable, this recent research doesn’t fully disentangle the complex, interconnected avenues by which educational attainment and other factors shape the homeownership prospects of young adults. In particular, the intergenerational channels by which parental resources affect their children’s homeownership status have not been fully separated from the roles of their children’s education and other endowments. Parental wealth enhances children’s chances for homeownership through direct financial assistance around the time of home purchase.2 But prior to that, family economic resources might also support college attendance by the children. In turn, higher education supports higher earnings and thus provides a financial foundation for achieving homeownership. Without knowledge of parental resources, children’s educational attainment might assume an exaggerated importance in homeownership achievement.  However, if education has an effect that is independent of parental resources, it would suggest that public policies to promote higher education could have the added benefit of promoting greater homeownership attainment. 

In the second of a series of studies sponsored by Fannie Mae, Dowell Myers, Gary Painter, and Julie Zissimopoulos of the University of Southern California unpack the complex relationships among adult children’s homeownership attainment, their education and other characteristics, and their parents’ resources. After controlling for child race, age, sex, and marital status in addition to parental resources, the researchers found that having a Bachelor’s or higher degree compared to not having a high school diploma increases homeownership attainment of the adult child by 17.5 percentage points. Even after introducing additional controls for the child’s current income and wealth (which is also correlated with parental resources), the researchers found that homeownership attainment remains 5.4 percentage points higher for those with at least a Bachelor’s degree.

Perhaps the most striking finding of the study is how little the education effect on homeownership is dampened when parental resources are controlled. Including parental endowments reduces the association between education and homeownership for adult children by less than 2 percentage points. This finding suggests that the educational boost to homeownership is largely independent of the parental resources that may have helped increase education.

The implication of finding this independent education effect is that homeownership attainment could be increased via policies that promote higher education and increase human capital. While it is not completely understood why higher education is associated with higher homeownership, candidate reasons include, foremost, the higher earnings and greater wealth that flow from greater human capital. Yet, evidence of an education effect that persists net of household income and wealth suggests that additional mechanisms are at work. For example, higher education might entail greater financial fluency, including better understanding of the steps necessary to buy a house and access credit markets. 

Higher education is subject to policy stimulation, and policies to increase attainment of a college degree have well-known benefits in the labor market and for wealth accumulation by households. This new research suggests that yet another benefit of providing broader access to higher education is improving access to homeownership.

Gary Painter
Director of Social Policy
Sol Price Center for Social Innovation
University of Southern California

Patrick Simmons
Director, Strategic Planning
Economic & Strategic Research Group

September 14, 2016

1See Susan M. Dynarski (2016), "The Dividing Line Between Haves and Have-Nots in Home Ownership: Education, Not Student Debt," The Brookings Institution, Evidence Speaks Reports (1, 17), May 3, 2016, (; Jamie Anderson (2015), "Yes, First-Time Buyer Demand is Weak. But Stop Blaming Student Debt," Zillow, September 16, 2015 (; and Qiang Cai and Sarah Shahdad (2016), "Student Debt: Whose Homeownership Rate Does It Hurt Most?" Fannie Mae Perspective, July 28, 2016 (

2 See Dowell Myers, Gary Painter, and Julie Zissimopoulos (2016), The Role of Parental Financial Assistance in the Transition to Homeownership by Young Adults, Working Paper (April), Fannie Mae, Washington, DC ( Using data from the Health and Retirement Survey, the authors found that the unconditional probability of transitioning to homeownership increased by 23.0 percent among adult children who had received a transfer of at least $5,000 for any purpose from their parents in the past two years. Even after controlling for parental wealth and other parent and child characteristics, the probability of transitioning to homeownership still increased by 13.1 percent with receipt of a transfer.

The authors thank Dowell Myers, Julie Zissimopoulos, and the other members of the project research team for their work on this study. The authors also thank Mark Palim and Hamilton Fout for their comments on the Working Paper upon which this FM Commentary is based. Of course, all errors and omissions remain the responsibility of the authors.

Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.