Housing costs are often the biggest line item for most people's budgets, and the current economic downturn has made it difficult for many people to pay their mortgages.
Mortgage delinquencies tend to rise significantly during recessions. According to quarterly data from the Federal Reserve Bank of New York, the delinquency rate on mortgages peaked at over 8% during the Great Recession and declined to below 1% in 2019.
But as the economy shrunk in response to the coronavirus shutdown, monthly data from Black Knight, a real estate technology company, indicates that the national delinquency rate nearly doubled between March and April of this year, the largest single-month increase ever recorded.
How cities compare for paid off mortgages
* Knoxville - 29%* Birmingham, Ala., - 29%* Chattanooga - 28.8%* Jackson, Tenn., 26.1%* Huntsville, Alabama - 25.6%* Memphis, 25.4%* Clarksville, Tenn., - 24.2%* Nashville, 23.3%Source: U.S. Bureau of Census data. Nationwide, 38% of owner-occupied homes have no mortgage.
Of course, those without such housing debt are better able to withstand such economic downturns and a new study suggests that Chattanoogans are more vulnerable since a lower share own their homes outright compared with the country as a whole.
A study by the online site Construction Coverage shows nearly 29% of Chattanoogans with homes have their houses paid off. That is higher than most major cities in the Midsouth but still below the U.S. average.
"Americans who own their homes outright are less vulnerable during recessions compared to those households with large mortgages," said Jonathan Jones, author of the recent study for Construction Coverage. "But higher income households with higher valued homes are less likely to have their mortgages paid off, and many households who have paid off their mortgages live in areas with lower costs of living."
At the state level, West Virginia and Mississippi have the largest rates of free and clear home ownership at 41.3 and 39.4 percent, respectively. At the low end, Maryland and Massachusetts have the smallest shares of residents who have paid off their homes, at just 16.6 and 19.2 percent, respectively.