Full home ownership here is nation's best
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Although few Americans live in the same house long enough to actually pay off a mortgage, homeowners in Pittsburgh are bucking the trend and staying put -- which is one reason why this metropolitan area has the nation's highest percentage of homeowners who own their houses outright.
Zillow, a national real estate information company based in Seattle, found that 38.6 percent of all homeowners in the Pittsburgh region are free and clear of mortgage debt, which is the highest percentage of outright homeownership the company found in any of the 30 largest metropolitan areas that it tracks.
Other metropolitan areas where the free-and-clear home-ownership rates were highest are Tampa, Fla., which came in at No. 2 with a 33.2 percent outright ownership rate; Detroit, with a 28.8 percent rate, and Philadelphia, which has a 27.6 percent rate of debt-free homeownership.
Atlanta has the lowest percentage of homeowners who own their homes outright at 17.7 percent. Las Vegas was only slightly better off with an 18.3 percent rate of free-and-clear homeownership.
But low turnover is only one reason why Pittsburgh tops the list.
The average price of homes in the Pittsburgh region has for many years been below many other parts of the country, and homeowners here did not get caught up the cash-back refinancing frenzy or the "buy high and sell higher" mentality that swept the nation during the real estate boom years.
Thus the Pittsburgh region sidestepped many of the painful consequences of the housing crash.
"There's a pretty high association between the percentage of people who don't have a mortgage and the average price of a home," said Stan Humphries, chief economist at Zillow. "In cheaper markets, more people will own their homes free and clear."
The median price of a single family home nationwide in November 2012 was $156,200, according to Zillow. Meanwhile, in the Pittsburgh metropolitan area, the median home price was $111,500. Lower home prices allow more people to buy a home without a mortgage, Mr. Humphries said, adding that those who do use a mortgage to buy lower-priced homes can pay off their debt more quickly.
"In general, Pittsburgh has not had really much of a housing recession at all," Mr. Humphries said. "Right now in the Pittsburgh market, home values are the highest they've ever been. That's not true for many markets, such as Phoenix, where home values are still 45 percent down from their peak."
Home values in the Pittsburgh region appreciated 3.5 percent from last year, according to Zillow.
"Generally, the performance of the Pittsburgh market now is because Pittsburgh did not have a housing bubble from 2001 to 2007," Mr. Humphries said. "If Pittsburgh had had big price spikes during the boom, housing would have been less affordable and fewer homeowners would own their homes free and clear."
Dan Murrer, vice president of RealSTATs, a South Side-based real estate information company, said Pittsburgh are residents are mostly conservative when it comes to their homes and not prone to speculate on home values.
"The length of homeownership is longer here," he said. "Places like Atlanta or Phoenix have a younger population and higher turnover. And when they buy, they often must borrow. Pittsburgh has more generational roots. People who are born and raised here will likely stay here for life."
The Zillow study also found demographic factors such as age influenced free-and-clear homeownership rates.
Nationwide, Zillow found that 65- to 74-year-olds are most likely to be free and clear (20.5 percent), followed by 74- to 84-year-olds (17.9 percent). This is attributed to the fact that the longer someone owns a home, the longer they have to pay off their mortgage.
Chris Briem, a regional economist at the University of Pittsburgh's Center For Urban Research, said Pittsburgh has not had a whole lot of new people moving in and many of the older people here who bought their homes in the 1970s and '80s or earlier have paid off their homes.
"We have an older demographic here and many of the older homeowners have paid off their homes," he said. "Our older homeowners have aged in place. We have ranked high for a while (in terms of stable real estate values) and it's largely due to age demographics."
First Published January 16, 2013 12:14 am