America’s Top Housing Markets Have a High Number of Mortgage-Free Homes—Except These 2 Cities

Homes sales are set to explode in next year’s top housing markets, but two of the cities on the list are outliers when it comes to outright ownership.

Virginia Beach, VA, and Colorado Springs, CO, are both in the top three metros of the Realtor.com® Top Housing Markets for 2025, with home sales expected to grow by an eye-popping 13.5%, to 27.1% next year, with the former ranked No. 1 on the list.

That’s a far cry from the national forecast, where sales are expected to inch up by just 1.5%.

Yet unlike most top markets on the list—like McAllen, TX, where 61.7% of homeowners own their homes outright—Virginia Beach and Colorado Springs see more than 70% of their homeowners carrying mortgages.

“These top markets are areas where there is an outsized share of younger families who are often buying their first or second home,” says Realtor.com chief economist Danielle Hale. “As a result, they tend to have a greater share of homeowners who have a mortgage, relative to other markets.”

While outright ownership is a hallmark of many top-performing markets, Colorado Springs (ranked No. 1 on the list) and Virginia Beach (ranked No. 3) also have a large portion of government-backed loans—like Veterans Affairs loans and Federal Housing Administration mortgages—which can fuel growth even in mortgage-heavy areas.

How ownership changes a market

Many homeowners own their properties outright in cities like McAllen and El Paso, TX, according to the Top Housing Markets report. This insulates these markets from the “mortgage-rate lock-in” effect, where sellers hesitate to move because they’re holding onto ultralow mortgage rates.

With fewer sellers locked in by “golden handcuffs,” these markets experience steadier housing stock levels and smoother sales activity—even in a world of elevated rates.

For context, 39.8% of U.S. homeowners now own their homes outright, a significant jump from 32.8% in 2010. These outright-ownership trends favor markets with older populations or lower home prices, where the debt-free dream is more attainable.

McAllen is one of just two of the 100 largest housing markets where a majority of homeowners—61.7%— own their home without a mortgage. Among the top 10 markets, 49% of El Paso’s residents own their homes outright, along with 43.8% of Miami, FL, homeowners and 38.2% of residents in Greensboro, NC.

Why these two cities have more mortgages

Outright ownership plays a much smaller role in Virginia Beach and Colorado Springs because a large chunk of the population is tied to the military. Nearly one in three households in these cities is connected to active-duty service members or veterans—compared to the national average of just one in eight.

Military families typically move every two to three years, creating a consistent flow of buyers and sellers. This mobility keeps housing markets dynamic, even when high mortgage rates might otherwise slow things down.

Veterans Affairs (VA) loans, a cornerstone of military home financing, offer no down payment and competitive rates, making homeownership more accessible and less sensitive to rising interest rates. Indeed, more than half of mortgages in Colorado Springs and Virginia Beach were government loans due to a high usage of VA loans.

One key advantage of government-backed mortgages is that in the case of VA and USDA loans, they require as little as 0% in down payments. FHA loans generally require a minimum 3.5% down payment. And because these loans are more commonly used in Virginia Beach, El Paso, and McAllen, the typical recent down payment was less than $10,000.

With many residents tied to the military or international connections, these markets benefit from a steady influx of younger buyers eager to settle down. These cities also offer relatively lower home prices, compared to pricier metros, attracting buyers who take advantage of flexible work arrangements.

Both cities have seen an uptick in new construction, ensuring more options for buyers even as other markets struggle with low housing stock.

How mortgage rates factor in

The Realtor.com 2025 Housing Outlook anticipates a 3.7% rise in home sale prices next year, and mortgage rates are expected to dip to the low 6%.

Markets like Virginia Beach and Colorado Springs are poised to feel the impact of these changes more acutely.

Here’s why: According to national data, 84% of existing mortgages are already at 6% or lower. As rates drop closer to this threshold, more homeowners may feel ready to sell, increasing inventory and transactions in these markets where mortgage usage dominates.

Meanwhile, outright ownership-heavy markets like McAllen and El Paso are less tied to rate fluctuations, continuing their steady sales activity regardless of interest rates.

“The good news for households in these markets is that the anticipated drop in mortgage rates is going to help improve prospects and the purchasing power of every dollar in these markets, something that is vitally important when mortgage debt is so prevalent,” explains Hale.