Everyone wants to own a house of their own but not many have the resources to fulfill this dream, mainly due to a higher ratio of income inequality.
With an average home in the U.S. costing approximately $200,000, saving up for the typical 20 percent down payment can be difficult.
Not being able to save is not the only reason associated with homeownership inequality. Factors such as the range of household income, range of home prices, age of the population, and the proportion of the population that have lived in their home for less than five years, all play a role.
But now, the trends are changing for the lower-income market for the better.
Homeownership rates have escalated to 63.7 percent, according to the latest quarterly report from the Census Bureau. Housing inequality — the gap in homeownership rates between the richest and poorest residents in any given housing market — appears to be on a downswing.
According to Trulia, an online residential real estate site for the United States, 77 percent of wealthy households own their own homes nationally, which is almost 2.3 times the 34.9 percent homeownership rate of poor households. Since 2012, the ownership gap between high-income and low-income households edged downward, decreasing to 2.3 times from 2.4.
Trulia analyzed homeownership rates for households headed by people aged 25 to 55 in the 100 largest U.S. housing markets. Wealthy households (defined as being in the top third by income of residents in a given market) are still 2.3 times more likely to own a home than their neighbors in the bottom third income level. That’s a 4 percent improvement from 2012 when wealthier households were 2.4 times more likely to own a home.
From 2007-12, there was a dramatic increase in the homeownership gap between high-income households and low-income households during the great depression. The housing and economic growth that stemmed out during the recovery years has helped to narrow this gap.
Here are the seven housing markets identified by Trulia, with the smallest homeownership gaps in the country:
1. Long Island, New York
Suffolk and Nassau counties in Long Island, New York, portrayed the lowest gap in homeownership rates in the country, with slightly more than half of less affluent households owning their own home.
As explained by Felipe Chacón, a housing economist for Trulia's Housing Economics Research Team this made perfect sense. The number of working class, suburban neighborhoods combined with nearby jobs in New York City: “They’re slightly older, and slightly more ready to settle down.”
The median home values within these counties are relatively high at $384,858, but since the median income is high as well at $105,914, home ownership is affordable for the majority of residents.
With a homeownership rate for the upper third of households by income of 93.0 percent, and the rate for the lower third of households by income of 50.1 percent, the upper third segment of the economy is 1.86 times more likely to own homes.
2. Daytona Beach, Florida
The median home value in Daytona Beach is $144,725, making it a very affordable place to buy a home.
With a homeownership rate for the upper third of households by income of 76.7 percent, and the rate for the lower third of households by income of 40.3 percent, the upper third segment of the economy is 1.90 times more likely to own homes in Daytona Beach.
3. Troy, Michigan
Troy is on the list of best places to buy a house in Michigan. The Detroit suburb has the third smallest gap in homeownership rates, with nearly 43% of low-income residents owning a home. With a homeownership rate for the upper third of households by income of 88.2 percent, and the rate for the lower third of households by income of 42.9 percent, the upper third segment of the economy is 2.05 times more likely to own homes.
4. Fort Myers, Florida
With a median home value of $173,127, more than a third of lower-income residents their own homes. The home prices are also relatively lower. With a homeownership rate for the upper third of households by income of 72.5 percent, and the rate for the lower third of households by income of 34.2 percent, the upper third segment of the economy is 2.12 times more likely to own homes.
5. Sarasota, Florida
The median home price, at $200,727, is close to the national average. More than 35 percent of lower income households own homes in the Gulf Coast city Sarasota. With a homeownership rate for the upper third of households by income of 76 percent, and the rate for the lower third of households by income of 35.2 percent, the upper third segment of the economy is 2.16 times more likely to own homes in this town of Florida.
6. West Palm Beach, Florida
The house ownership rates by the wealthier groups are relatively lower in the West Palm Beach at 76 percent, slightly higher than twice the rate of owning homes by the bottom third at 34.8 percent. With a median home price of $204,883, wealthier people are 2.20 more likely to own homes.
7. Montgomery County, Pennsylvania
Montgomery County is relatively pricier, with a median household income of more than $94,000 per year and a median home value of $280,321. However, 41 percent of the low income households still manage to find affordable homes.
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