Home Ownership in West Virginia: Quality vs. Quantity
As many people may know, West Virginia ranks very high in home ownership among the 50 states. In fact, according to the latest Assets & Opportunities Scorecard released by the Corporation for Economic Development, West Virginia had the 3rd highest rate of home ownership in the nation in 2011 at 72.3 percent. While home ownership is not an end in itself, it an important part of the American Dream and it allows people to build assets (equity) and be more in control of where they live. However, according to the Assets Scorecard, West Virginia also had the highest share of high-cost mortgage loans.
The flip side to West Virginia’s high home ownership rates is that the value of the homes is very low. How low? As the chart below illustrates, the median value of owner-occupied units in West Virginia is lower than any other state.
The median home value was just $99,300 in 2011, compared to $173,600 nationally. One reason West Virginia has such low home values is the large share of mobile homes in the state. Approximately 15 percent of all housing units in the state are mobile homes.
Among the 50 states, West Virginia had the 4th highest share of mobile homes in the country in 2011. The national average was 6.5 percent. Over the last several decades the share of mobile homes in the United States has grown, although at a faster pace in West Virginia. In 1970, approximately 4.6 percent of housing units were mobile homes in West Virginia compared to 3.1 percent nationally.
Another interesting facet of West Virginia’s high home ownership rates is that it is clearly not predicated on the federal mortgage interest deduction, which is one of the largest incentives to purchase a home. That’s because the mortgage interest deduction mostly benefits the wealthy who represent a relatively small portion of tax filers in West Virginia. In 2010, West Virginians paid nearly $1 billion in mortgage interest according to the IRS. Tax filers making over $75,000 (AGI) represented just 17 percent of total tax filers but nearly tw0-thirds (64.3%) or $615 million of the itemized interest paid in 2010.
While having higher rate of home ownership is positive thing for West Virginia, it is important to keep in mind it has a lot to do with the low value of homes in the state and the fact that the state is very rural with fewer apartments and condos that are more typical in metropolitan areas. Moreover, the large share of mortgages in the state that have higher-than-average interest rates should make us cautious about encouraging home ownership if it puts families at a greater risk of foreclosure and a loss of home equity.