Generally, when we think of inequality, such as income inequality, we perceive it as a bad thing however, when it comes to home prices, perhaps inequality is a good thing! A recent study of home price inequality by Lending Tree resulted in St Louis being ranked as the 4th highest metro area in the nation for home price inequailty. How Lending Tree ranked the cities was by using the GINI coefficient which is often used to measure income inequality. The way it works, in a nutshell, is a GINI Coefficient of 0 means everything is equal, so everything is at the same value and a 1 means nothing is equal and there is one value for one and everyone else has none. So the higher the number, the greater equality. St Louis has a GINI coefficient of 0.379.
Why is Home Price Inequality Good?
The reason I said home price inequality is a good thing for St Louis is that it means we have homes in a wide range of price ranges thereby making them affordable to people at widely different income levels. For example, as the table below shows, the 95th Percentile home price in St Louis is $493,000 while the 5th Percentile is only $43,000 which works out to a ratio between the 95th and 5th percentile of 11.5, a huge gap. By comparision, #50 on the list is Salt Lake City, Utah, where the 95th percentile home price is $597,000 and the 5th percentile $191,000 for a ratio of just 3.1.
Home Price Inequality In The U.S. – Top 10 MSA’s
