• Households in the bottom 20 percent of income have a homeownership rate of 30 percent nationally, while those in the top 20 percent have a homeownership rate of 87 percent.
• Minneapolis has the highest homeownership rate among middle-income households, at 91 percent. San Diego has the lowest, at 41 percent.

Homeownership is a critical part of the American Dream for millions of Americans, regardless of how much money they make. But the reality is, the less you earn, the less likely you are to own a home.

With income inequality on the rise, we wanted to better understand the relationship between homeownership and income and identify areas where low- and middle-income families are more apt to own homes. Looking at 2013 American Community Survey data, we separated households into five equal income buckets (quintiles) for their metro and calculated the homeownership rates of those households nationally and for each metro.

Nationally, those in the highest quintile of income for their metro have homeownership rates 2.6 times higher than those in the lowest quintile.

A national picture is useful, but real estate is local, and examining the data on a smaller scale can be useful in identifying interesting local trends. The highest earners in Charlotte and Minneapolis, for example, have the highest homeownership rates in the nation (98 percent). The price to income ratio measures how much more expensive a typical home is compared to an area’s median income. For example, if the median income in an area is $50,000 per year, and the median home costs $150,000, the price to income ratio is 3.

Price to income can be a good measure of a home’s relative value in one area compared to another, and in both Charlotte (2.9) and Minneapolis (3.1), homebuyers will enjoy a lower price to income ratio than in the nation as a whole (3.3).

On the flip side, those making the least in San Jose have a homeownership rate of just 11 percent, the lowest rate in the country. Of course, even the most “inexpensive” homes in San Jose are still more expensive than more typical or even some higher-end homes in other markets. Homes valued in the bottom one-third of all homes in the San Jose market have a median value of $555,800, as of February 2014.

St. Louis earns the distinction for having the highest homeownership rate (47 percent) among households earning the least. For those in the middle of the income distribution (earning between the 40th percentile to the 60th percentile of income for an area), Minneapolis is the place to be, with an astonishing middle-income homeownership rate of 91 percent. In San Diego, the middle-income homeownership rate is less than half what it is in Minneapolis, at just 41 percent.  

Use the interactive graphic below to see homeowner ship by quintile for the United States and a variety of metro areas. Green bars in the metro area charts represent 95 percent confidence intervals.

Methodology

In order to calculate the homeownership rates by income quintile, first we restricted our dataset to households headed by a person who was 35 to 54 in order to control for differences in the age of first-time homebuyers and the distorted picture of income from retirees. Then the 20th, 40th, 60th and 80th percentiles were calculated for each metro.  Households were assigned to quintiles based on the income distribution at the metro level. Metros where less than 35 households were sampled in any quintile were dropped, leaving 38 total metros analyzed.