Home Ownership and Income

Home ownership has been termed “the American Dream” and many individuals and households aspire to leave the world of renting and have “a place to call their own”. Acquiring a home is very costly and for most people will represent the largest purchase of their lifetime.  With this being the case, one might conclude that if home ownership is a primary personal goal, it makes sense to relocate to areas with the highest median incomes.  After all, greater incomes will permit one to dedicate more dollars to the objective.

An analysis of data from the U.S. Census Bureau 2017 American Community Survey completed by 24/7 Wall Street suggests that this may not be a good financial strategy. Consider the following:  The state of Maryland had the highest median household income ($80,776) of all U.S. states but its rate of home ownership was only 21^st highest of the 50 states.  New York had the 14^th highest median household income but the lowest rate of home ownership at only 53.8%.  At the other extreme, West Virginia had the lowest median household income ($43,469) but the second highest (72.5%) incidence of home ownership.  Likewise, Maine had the highest rate of home ownership at 73.2% despite having the 20th lowest median family income of $56,277.

Are there any places where housing costs and income seem to be in balance?  Wisconsin make the grade here with the 22^nd highest median household income at $59,305 accompanied by the 22^nd highest home ownership rate at 66.6%.  Yet, right next door in Minnesota there’s an even more favorable relationship with the 3^rd highest home ownership rate (71.6%) funded by the 12^th highest median household income of $68,388.

Of course, none of these statistical measures captures the complexity that goes into choosing a place to live. Climate, transportation options, education quality and available forms of entertainment are just a few of the many additional factors that might also be considered.  Likewise, simple numerical rankings don’t account for variations in the age, quality and size of available housing units.  However, as a starting point, it appears that the best opportunities for home ownership tend to fall outside of the locations with highest incomes.