LendingTree Study: Where Home Price Inequality is Highest

Released  July 17, 2018
By Megan Greuling

CHARLOTTE, N.C., July 17, 2018 – LendingTree®, the nation’s leading online loan marketplace, today released a study on where home price inequality is highest.

The GINI coefficient, a well-regarded metric, is the most commonly used measure of economic inequality. The coefficient ranges from 0 (complete equality where every value is the same) to 1 (complete inequality where one entity has 100% of the value and all others have none). Thus, a higher GINI coefficient means there is more inequality. LendingTree analyzed homes in the 50 largest metro areas to determine the GINI coefficient of home values in each metro to measure home price inequality in each market.

“Inequality is the defining economic debate of our times,” said Tendayi Kapfidze, Chief Economist and report author. “Since 1980, the majority of income growth in the United States has accrued to the top of the income scale, a trend that accelerated following the 2007-08 financial crisis. Home values have finally recovered from the most recent housing crisis to the extent that affordability is now a concern. In many large cities, the median-priced home is now out of reach of median income households.”

LendingTree’s study ranks the top 50 cities by the GINI coefficient and shows the values of the 5th and 95th percentile homes and their ratio to provide a more tangible measure of home value inequality.

Key Findings

  • Detroit, Birmingham, Ala. and Indianapolis have the highest home price inequality in the nation, with a level of inequality twice that of the most equal markets.
  • Salt Lake City, Portland, Ore. and Denver have the least home price inequality. The 95th percentile of home values is 3x the value of the 5th percentile in these markets, compared with over 10x the value in the most unequal markets.
  • High home prices don’t necessarily mean high inequality. The San Jose and San Francisco metros, with the highest values for the 95th percentile of homes ($2.7 million and $2.3 million respectively), ranked No. 41 and No. 33 out of 50 for inequality.
  • The metros with the most inequality tended to have very low prices for the 5th percentile of home values. Of the 10 most unequal markets, none had a 5th percentile home value of $100,000 or more, and averaged $48,500. The most equal markets had a $242,100 average value for the 5th percentile of homes.
  • The World Bank lists the income GINI for the U.S. at 0.415 in 2016. Only the top-ranked city, Detroit at 0.446, was above this level. So income inequality is greater than home value inequality, a phenomenon also reflected in the fact that wealthier households don’t need to spend as high a portion of their earnings on housing.
  • The Midwest dominates the most unequal, while the West dominates the most equal.
  • The most equal markets are less affordable for borrowers with low incomes.

 
Cities with the most unequal housing markets

#1 Detroit
GINI Coefficient: 0.446
95th Percentile Home Price: $431,000
5th Percentile Home Price: $32,000
Multiple of 95th to 5th Percentile home price: 13.5

#2 Birmingham, Ala.
GINI Coefficient: 0.392
95th Percentile Value: $518,000
5th Percentile Value: $45,000
Multiple of 95th to 5th Percentile: 11.5

#3 Indianapolis
GINI Coefficient: 0.385
95th Percentile Value: $445,000
5th Percentile Value: $44,000
Multiple of 95th to 5th Percentile: 10.1

Cities with the most equal housing markets

#48 Denver
GINI Coefficient: 0.226
95th Percentile Value: $885,000
5th Percentile Value: $260,000
Multiple of 95th to 5th Percentile: 3.40

#49 Portland, Ore.
GINI Coefficient: 0.217
95th Percentile Value: $772,000
5th Percentile Value: $237,000
Multiple of 95th to 5th Percentile: 3.25

#50 Salt Lake City
GINI Coefficient: 0.210
95th Percentile Value: $597,000
5th Percentile Value: $191,000
Multiple of 95th to 5th Percentile: 3.10

“As we went through the analysis, we reached a conclusion that might be counterintuitive to conventional thought — housing value inequality might be a good thing,” said Kapfidze.

“Cities with more home value inequality have a wider distribution of home values, which means that families earning lower incomes may still have the opportunity to access homeownership in these cities. The concurrent presence of high value homes suggests that their economies are vibrant enough to support higher earning jobs as well. Looked at in this manner, home value inequality could be beneficial.”
 
To view the full report, visit https://www.lendingtree.com/home/where-home-price-inequality-is-highest/.
 

Home Price Inequality in the Top 50 MSAs
 Rank City Gini Coefficient 95th Percentile Home Price  5th Percentile Home Price  Ratio (95th/5th)
1 Detroit  0.446    431,000      32,000           13.5
2 Birmingham, Ala.  0.392    518,000      45,000           11.5
3 Indianapolis  0.385    445,000      44,000           10.1
4 St. Louis  0.379    493,000      43,000           11.5
5 Cleveland  0.374    401,000      41,000             9.8
6 Memphis, Tenn.  0.370    423,000      39,000           10.8
7 Pittsburgh  0.367    471,000      53,000             8.9
8 Chicago  0.355    668,000      68,000             9.8
9 Kansas City, Mo.  0.352    398,000      40,000           10.0
10 Charlotte, N.C.  0.351    653,000      80,000             8.2
11 Jacksonville, Fla.  0.349    533,000      52,000           10.3
12 Atlanta  0.347    620,000      75,000             8.3
13 New York  0.347    1,230,000    159,000             7.7
14 Houston  0.346    645,000      94,000             6.9
15 New Orleans  0.344    617,000      91,000             6.8
16 Louisville/Jefferson County, Ky.  0.339    464,000      56,000             8.3
17 Baltimore  0.337    709,000      69,000           10.3
18 Miami  0.337    968,000    152,000             6.4
19 Cincinnati  0.336    463,000      61,000             7.6
20 Dallas  0.334    652,000      95,000             6.9
21 Columbus, Ohio  0.333    494,000      53,000             9.3
22 Oklahoma City  0.332    419,000      51,000             8.2
23 Tampa, Fla.  0.330    563,000      75,000             7.5
24 Nashville, Tenn.  0.329    709,000    110,000             6.4
25 Milwaukee  0.327    532,000      60,000             8.9
26 Philadelphia  0.327    628,000      74,000             8.5
27 Buffalo, N.Y.  0.319    370,000      45,000             8.2
28 Seattle  0.317    1,336,000    234,000             5.7
29 Los Angeles  0.311    2,134,000    330,000             6.5
30 Boston  0.308    1,318,000    231,000             5.7
31 Austin, Texas  0.304    796,000    160,000             5.0
32 Raleigh, N.C.  0.303    629,000    112,000             5.6
33 San Francisco  0.298 2,279,000    387,000             5.9
34 Virginia Beach, Va.  0.293    576,000    103,000             5.6
35 Washington  0.293    1,092,000    202,000             5.4
36 Richmond, Va.  0.292    602,000      99,000             6.1
37 San Antonio  0.292    506,000      91,000             5.6
38 Orlando, Fla.  0.290    557,000    100,000             5.6
39 Phoenix  0.284    638,000    140,000             4.6
40 Providence, R.I.  0.274    669,000    158,000             4.2
41 San Jose, Calif.  0.270    2,687,000    561,000             4.8
42 San Diego  0.264    1,598,000    363,000             4.4
43 Minneapolis  0.260    617,000    150,000             4.1
44 Riverside, Calif.  0.259    700,000    152,000             4.6
45 Hartford, Conn.  0.256    536,000    127,000             4.2
46 Las Vegas  0.247    591,000    153,000             3.9
47 Sacramento, Calif.  0.229    812,000    227,000             3.6
48 Denver  0.226    885,000    260,000             3.4
49 Portland, Ore.  0.217    772,000    237,000             3.3
50 Salt Lake City  0.210    597,000    191,000             3.1

 
 
About LendingTree
LendingTree (NASDAQ: TREE) is the nation's leading online loan marketplace, empowering consumers as they comparison-shop across a full suite of loan and credit-based offerings.  LendingTree provides an online marketplace which connects consumers with multiple lenders that compete for their business, as well as an array of online tools and information to help consumers find the best loan. Since inception, LendingTree has facilitated more than 65 million loan requests. LendingTree provides free monthly credit scores through My LendingTree and access to its network of over 500 lenders offering home loans, personal loans, credit cards, student loans, business loans, home equity loans/lines of credit, auto loans and more. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree.