Cheaper Housing Options Boost Homeownership in Some U.S. Metros
(Bloomberg) -- The American dream of homeownership is alive and within reach, even to those with modest household income, if they happen to live in Minneapolis, Pittsburgh or St. Louis.
Low-earning families are more likely to own a home in those cities than in any other large metro, according to an analysis of the 50 largest U.S. metro areas by Redfin Corp. Ample supplies of starter housing stock provide a bigger share of the populace to build wealth in home equity, according to Daryl Fairweather, the Seattle-based company’s chief economist.
“In many expensive metros, low-income residents aren’t able to access the benefits of homeownership because of a lack of affordable starter homes,” Fairweather said in the report. “In areas like Minneapolis and Pittsburgh, low-income workers are still able to get their foot in the door.”
In Minneapolis, 57.7 percent of low-income families, with $55,000 or less in household income, owned a home in 2017, up 4 percentage points from 2012, according to Redfin. In Pittsburgh, the rate is 55.8 percent and in St. Louis, it’s 55.5 percent. Much of that is due to the large supply of condos, townhomes and fixer-uppers priced below the median, especially in the suburbs, Chris Prescott, a Redfin market manager in Minneapolis, said in the report.
The largest shares of home-owning families tend to be in places where the typical home sells for less than the national median of $285,000, the study found. The report defines low-income households as being in the bottom 25 percent in the metro area.
More expensive coastal markets, led by Los Angeles and New York, had the lowest homeownership rates for low-earning households, Redfin found. In Los Angeles, just 31 percent of households earning less than $44,600 were able to own homes. In New York, it’s 35 percent. Nationally, the homeownership rate for low-income families was 50.8 percent in 2017, up from 48.6 in 2012.
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