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Here are the cities with the highest share of zero-debt homeowners

A study released today showed which cities have the highest share of homeowners without mortgage debt, ranking U.S. cities by the proportion of such homeowners who are ‘free and clear’.

To assess “free and clear” homeowners, analysts used LendingTree’s proprietary database of almost all homes in the United States to calculate the proportion of homes with zero mortgage debt in each city. They also calculated the median value of mortgaged and non-mortgaged properties and their ratio.

Key findings:

The top free and clear cities get there by different means:

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  • No. 1 Detroit arrived at the top spot for a not-so-great reason: mortgage lenders have historically viewed housing in the city as risky and, as a result, there are fewer homeowners here. This was often driven by discriminatory lending practices which excluded many Detroit residents from the mortgage market.
  • Miami ranks second and is a top destination for foreign buyers. These buyers are often wealthy and therefore pay cash for their home purchases.
  • Third place Las Vegas has a high ratio of homes owned by cash-ready investors. Persistent migration inflows mean potential landlords find a ready market and homes at affordable prices.
  • The least free and clear cities are Washington D.C., Virginia Beach and Seattle.
  • Washington D.C. and Seattle have some of the highest-priced homes in the nation. Even with the abundance of high-paying jobs in these cities, it’s difficult to purchase a home without a mortgage.
  • Virginia Beach has one of the highest rates of military households in the country. It also has more than its share of homeowners, thanks to the accessibility of mortgages from the Department of Veterans Affairs (VA). These typically younger mortgage holders are still paying off the loans, making Virginia Beach one of the least free and clear cities.
  • A curious result is that six cities in California are among the top 20 free and clear cities, despite relatively high home prices in the state. California’s property tax laws discourage homeowners from moving, so many have long tenures and have had the opportunity to pay down their mortgages.

“As home prices rise, these homeowners receive the full benefits and see their wealth accumulate,” said Tendayi Kapfidze, Chief Economist at LendingTree. “This wealth accumulation boosts consumer spending via the wealth effect, making for more dynamic economies.”

Kapfidze continued, “Homeowners who do not have mortgage debt can decide if and how they want to access this wealth, perhaps by taking out a loan to address life needs, and are generally better able to absorb financial shocks. The Federal Reserve’s measure of how much wealth households have in real estate equity has climbed from a $6-trillion level nine years ago to about $15 trillion in 2018.”

50 Largest Cities Ranked by Percent of Free & Clear Homes

Rank

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Metro

Percent

of Free

& Clear

Homes

Median

Value of

Non-

mortgaged

(“Free

& Clear”)

Homes

Median

Value of

Mortgaged

Homes

1

Detroit

55%

$103,000

$206,000

2

Miami

52%

$236,000

$303,000

3

Las Vegas

48%

$231,000

$252,000

4

Birmingham,

Ala.

46%

$127,000

$188,000

5

Tampa, Fla.

45%

$166,000

$219,000

6

Oklahoma

City

45%

$131,000

$162,000

7

San Diego

44%

$580,000

$561,000

8

San

Francisco

43%

$935,000

$874,000

9

Orlando, Fla.

42%

$191,000

$238,000

10

Phoenix

42%

$232,000

$254,000

11

Pittsburgh

42%

$135,000

$170,000

12

Kansas City,

Mo.

42%

$156,000

$200,000

13

Memphis,

Tenn.

42%

$113,000

$170,000

14

Buffalo, N.Y.

42%

$128,000

$160,000

15

Los Angeles

42%

$660,000

$611,000

16

Cleveland

41%

$112,000

$154,000

17

San Jose,

Calif.

41%

$1,134,000

$1,032,000

18

Sacramento,

Calif.

40%

$388,000

$395,000

19

Riverside,

Calif.

39%

$319,000

$353,000

20

Jacksonville,

Fla.

39%

$156,000

$209,000

21

Atlanta

39%

$174,000

$219,000

22

New York

38%

$458,000

$465,000

23

Cincinnati

38%

$146,000

$178,000

24

Milwaukee

37%

$201,000

$212,000

25

Charlotte,

N.C.

36%

$176,000

$223,000

26

Indianapolis

36%

$104,000

$155,000

27

Chicago

35%

$210,000

$244,000

28

Columbus,

Ohio

35%

$151,000

$202,000

29

Minneapolis

35%

$254,000

$271,000

30

St. Louis

35%

$128,000

$181,000

31

Houston

34%

$177,000

$225,000

32

New

Orleans

34%

$176,000

$215,000

33

Salt Lake

City

34%

$316,000

$306,000

34

San Antonio

34%

$183,000

$210,000

35

Nashville,

Tenn.

33%

$219,000

$259,000

36

Louisville,

Ky.

33%

$142,000

$183,000

37

Dallas

33%

$192,000

$249,000

38

Austin,

Texas

31%

$278,000

$297,000

39

Providence,

R.I.

29%

$263,000

$274,000

40

Raleigh, N.C.

29%

$208,000

$241,500

41

Denver

29%

$385,000

$403,000

42

Portland,

Ore.

28%

$387,000

$386,000

43

Philadelphia

28%

$186,000

$246,000

44

Baltimore

27%

$237,000

$296,000

45

Boston

26%

$473,000

$468,000

46

Richmond,

Va.

25%

$223,000

$244,000

47

Hartford,

Conn.

24%

$211,000

$234,000

48

Washington

23%

$392,000

$409,000

49

Virginia Beach,

Va.

22%

$216,000

$234,000

50

Seattle

22%

$447,000

$480,000

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About Carl Fox

Carl Fox is the senior money and finance writer for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.
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