With all the talk about staggering number of underwater owners Zillow released a very impressive report today about the number of homes that are owned..outright…with no loan…
Nationwide, using Zillow’s Negative Equity 2012 Q3 data; 29% (20.6 million) of homeowners own their home outright. West Virginia tops the state list with the highest percentage of free and clear homeowners (45%) followed by Louisiana (39%) and Arkansas (38%) as shown in the bar graph below.
Zillow’s study finds a direct correlation between the the average cost of a home and the percent of paid off homes. Bottom line, folks who live in lesser expensive areas are more likely to pay off their homes:
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It is reasonable to conclude that the free and clear homeownership rate varies across the country depending on location specific home values and characteristics of the primary mortgagees. We find, among the 100 leading metros (ranked by population size); a third of the metros have free and clear homeownership rates higher than or equal to the national average of 29%. McAllen, TX has the highest percentage of free and clear homeownership rate of 49% followed by Sarasota, FL at 41% and Scranton, PA at 40%. The free and clear homeownership rate of 49% in McAllen, TX is partly explained by its low ZHVI ($75,500) compared to the national ZHVI of $153,800. We also find that the percentage homeowners in McAllen, TX with a credit score below 600 (12%) is twice that of at the national level (6%) and hence these homeowners most likely require all cash or a higher down payment to buy their homes. Sarasota, FL; on the other hand, has an older population which possibly leads to a higher free and clear homeownership rate. The percentage of 55 and older primary mortgagees is 66% in Sarasota, FL compared to 49% nationally.
Read the whole report on Zillow.