6 ms·

The share of Americans who are mortgage-free is at an all-time high

35 points by safaa1993 3y ago

toomuchtodo 3y ago
https://archive.today/l2Aow https://archive.today/l2Aow (if you're having problems with this link, read first: https://news.ycombinator.com/item?id=38294214 https://news.ycombinator.com/item?id=38294214)
saqadri 3y ago
Must be nice :). I wish I was in that 40%
- SV_BubbleTime 3y ago
  I am, and honestly… my city keeps raising the taxes so damn much that I wouldn’t say I am just swimming in cash.
  - ljf 3y ago
    Tax in America boggles me. In my mind it is all low tax, and we brits pay more. Council tax, which is the sort of local tax most similar to the one you mention is about £2k a year on a large 4 bed house - and council tax is pretty flat - the least you can pay is about £1k - the most expensive houses you still only pay about £3k or less.
    - mikestew 3y ago
      I'm confused. I read "we brits pay more", yet what I read is that the maximum tax to pay on a large house is £3K. I'd love to have property/council tax that low (it would cut our tax bill in half). And we live in a 1200 feet^2/112 m^2 shoebox. Granted, Redmond, WA ain't cheap, but even someplace out in the sticks is going to be at least that much if one decides on the 4000 sq. ft. McMansion. So which part of my reading comprehension failed? :-)
      - ljf 3y ago
        Sorry - poorly written - I was continuing on 'in my mind, we brits pay more'
        mikestew 3y ago
        Ah, got it; makes much more sense now. Thanks for the clarification.
      - rwmj 3y ago
        Council Tax really should be more (speaking as someone who would be affected). Council funding has been massively cut back by central government resulting in a lot of problems at the local level.
    - svachalek 3y ago
      Tax on a 4 bedroom house in Silicon Valley bought recently probably runs about $20,000 per year on average. Granted this is one of the highest in the US but I don't know anyone with property tax that low.
    - sys_64738 3y ago
      But the problem is that you live in England while I live in America. I used to live in England and happily pay more real estates taxes for the privilege of living in the USA.
      - ljf 3y ago
        Good for you. My point was that the 'story of America' is low tax and freedom. Low tax no longer seems to be true (or is it?) and freedom is debatable.
        sys_64738 3y ago
        America isn't the same as Britain as there's no uniform tax code except at the federal level. Think of the US like the EU where it has individual states that have their own tax burden which can be low or substantial. It all depends where you live. In terms of freedom, what is your definition of freedom? That needs to be understood first.
  - Wistar 3y ago
    Yes. My property taxes have gone from about $450/mo to about $1,250/mo in 18 years.
legitster 3y ago
I had an economics professor who commented offhand that, while we spend so much energy debating wealth transfer from rich-to-poor (or vis versa), the entire US economy is functionally built to transfer wealth from young to old. Part of the reason affordability is so bad is that we have one of the largest, wealthiest population of non-working adults (retirees) that has ever existed in the world ever. And US financial policy specifically encouraged real-estate to be a primary vehicle for that wealth.
- psychlops 3y ago
  I came here to say this, but you said it way better. I don't think it is understood enough that the older population is getting and keeping wealth at an accelerated rate. The entire concept of 30 year treasury bonds transfers debt of the current generation onto the next and nobody seems to question it. Younger generations just understand that the system is rigged and have looked for other methods (socialism) to even the playing field again. They aren't wrong in their goals, but current proposals are sadly ignorant.
- jackcosgrove 3y ago
  The situation is more acute in developed countries where older people outnumber younger people. There is very little likelihood of reform in those places.
- xnx 3y ago
  > we have one of the largest, wealthiest population of non-working adults (retirees) that has ever existed in the world ever This is an interesting topic that doesn't seem like it gets a proportional amount of attention. What becomes of those assets as that generation gets too old to live in their own homes or dies? For retirees that have chosen to "age in place" in their oversized homes (i.e. built for 4-5 people, but now holding 2), what becomes of those properties. This is one way the housing "crisis" could sort itself out.
- PopAlongKid 3y ago
  > the entire US economy is functionally built to transfer wealth from young to old. Until the old die, which they inevitably do, and then the transfer completes the cycle back to the young. >largest, wealthiest population of non-working adults (retirees) What does that have to do with affordability? Most of the current income of these "retirees" is based on the work they did earlier in life (Soc. Security[0], 401k/IRA withdrawals). Further, you seem to be conflating "non-working" with being non-paid. Many of these retirees are providing unpaid daycare to grandchildren, unpaid assisted living service to other elder family members, or volunteer positions in the community. [0]Yes, I understand that today's Soc. Security is funded mostly by today's wage earners, but not all of it. On an inflation adjusted basis, a good chunk of Soc. Sec. benefit is just the taxpayer's own FICA taxes that have been earning interest over time coming back to them, as well as the income taxes they pay on those very same Soc. Security benefits.
superkuh 3y ago
>Missing from this story is a third, even more fortunate group: the rapidly growing number of Americans who own their homes outright. Missing from this story is a fourth, the even less fortunate group: the rapidly growing number of Americans who have never owned a home and know better than to try. The growth of this group is likely what's causing the growth in the relative proportion of home owners who are mortgage free.
- brightball 3y ago
  Plenty of opportunities. Just might be in areas with lower populations. Combined with remote work…
  - runeofdoom 3y ago
    A lot of areas with lower population do not have the requisite internet infrastructure to support remote work. And the ones that do have seen their housing prices shoot up.
    - ghaff 3y ago
      I question how true that is at this point. Even Starlink seems pretty suitable for most remote work scenarios at this point. (Though TBF Starlink is a game-changer in that respect. My brother's house would have been very marginal for remote working before Starlink came along.)
- drivebycomment 3y ago
  https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N shows the overall home ownership has been going up since 2016, currently around 66% though still lower than peak 69% in 2014, but higher than 63% in 1965.
  - superkuh 3y ago
    I think you're confused. I'm talking about the proportion of human people that own a home. Your link and plot is talking about the proportion of homes the owner lives in. >"The homeownership rate is the proportion of households that is owner-occupied."
whobre 3y ago
A bad title. I am mortgage-free because I rent and I don’t belong there. Should be: “The Share of American Homeowners…”
- all2 3y ago
  I see this sort of thing crop up when people talk about 'home owners' as well. It's like the classification isn't narrow enough to be relevant. I want to know the percent of people living in homes who don't have a mortgage. Ah, here we go, according to Forbes [0], only 23% of home "owners" don't have a mortgage, as in they actually own their homes. This is among the lowest rate of actual ownership in the first world. Conclusion from the Forbes article: It seems U.S. policy maximizes mortgage-ownership, not home-ownership. [0] https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-lowest-percentage-of-households-that-own-their-homes-without-mortgages/?sh=5fe2b18b3124 https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-...
  - kelnos 3y ago
    > This is among the lowest rate of actual ownership in the first world. I don't know if this is as big a problem as it sounds. I could pay off my mortgage next week if I wanted to, but "renting" money from a bank for 2.6% while getting 5.4% on short-term Treasury bills seems a lot more financially responsible than paying down a mortgage just because it feels good to be debt-free. Certainly not everyone can do this, and there are lots of people (especially those who are buying now) with interest rates that are higher than what they can safely and predictably make to offset that cost. But just saying "X% of American homeowners carry a mortgage" doesn't tell the whole story.
    - ghaff 3y ago
      I paid off a mortgage a number of years back and the numbers probably marginally made sense. The debt-free thing probably pushed it over the edge. But if I had a ten year old mortgage today? No way would I be paying it down today.
  - ghaff 3y ago
jackcosgrove 3y ago
Between the long-term shortfall in new construction, the number of mortgage holders with rock bottom rates, and the number of homes owned free and clear, I don't see a big fall in prices as we saw in 2008-2010 anytime soon. Unemployment would have to be horrifically bad to dislodge current mortgage holders in numbers that could cause house prices to fall like back then.
- carlosjobim 3y ago
  I'd agree with you if people lived forever.
  - ZoomerCretin 3y ago
    The population is growing far faster than housing is being built. It's not a matter of waiting for people to die.
    - carlosjobim 3y ago
      That's not true anymore, most of the world has no population growth: https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?view=map https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?view=map
      - ZoomerCretin 3y ago
        We are on an article talking American homeownership. America is projected to continue growing through the rest of the century due to immigration.
        carlosjobim 3y ago
        And these immigrants can afford the houses that native Americans can't afford?
joshstrange 3y ago
I'm debt free except for my mortgage (and my CC but that's temporary and I never carry a balance) but I have a hard time seeing why I'd want to pay off my mortgage. My mortgage is at 2.25% and my savings account gives me 5%. At this point (especially with the market not really doing awesome) why wouldn't I just dump any extra money I have into my savings? I mean that's not really a question and it's what I've been doing for a while now. Even before they raised interest rates I was getting 3% on my savings. A part of me would love to throw money at my principal but oddly paying off that debt would be financially irresponsible in the long run.
- xnx 3y ago
  > My mortgage is at 2.25% and my savings account gives me 5% This is a great situation to be in. You should not be making any extra mortgage payments that you don't have to.
- theandrewbailey 3y ago
  Risk. Where have you factored the risk? Let's pretend you have your house paid off. Would you borrow against your fully paid-off house at 2.25% interest to put into a savings account at 5% return? The terms involve someone else owning part of your house, and could force you out if they don't get paid. Does that sound like a good plan to you? If you don't think it is, that's risk, but that's what you're effectively doing right now.
  - leoqa 3y ago
    > 2.25% interest to put into a savings account at 5% return Sure, that seems rather savy to me. The only problem is I can’t guarantee 5.5%
    - ghaff 3y ago
      At the moment--though it likely won't last--you can get 5% on very low risk investments primarily in treasuries.
      - 3y ago
deleted 3y ago
[deleted]
ZoomerCretin 3y ago
Is this not simply a function of Americans growing older than ever?
mikewarot 3y ago
As one of the very lucky people who have a house with no mortgage, it's only that fact that has kept me away from homelessness in the past 3 years after getting long covid, and being yeeted out of the work force permanently. We own the absolutely cheapest house in town. But it drives me nuts that the house has tripled in "value" since we bought it a decade ago, just because of the market. Our child is still a teen, but having a home passed down will greatly help secure their future, should we both be able to avoid medical bankruptcy that gets so many Americans on their way to aging out.

35 points by safaa1993 3y ago

https://archive.today/l2Aow https://archive.today/l2Aow (if you're having problems with this link, read first: https://news.ycombinator.com/item?id=38294214 https://news.ycombinator.com/item?id=38294214)

saqadri 3y ago

Must be nice :). I wish I was in that 40%

SV_BubbleTime 3y ago
I am, and honestly… my city keeps raising the taxes so damn much that I wouldn’t say I am just swimming in cash.
- ljf 3y ago
  Tax in America boggles me. In my mind it is all low tax, and we brits pay more. Council tax, which is the sort of local tax most similar to the one you mention is about £2k a year on a large 4 bed house - and council tax is pretty flat - the least you can pay is about £1k - the most expensive houses you still only pay about £3k or less.
  - mikestew 3y ago
    I'm confused. I read "we brits pay more", yet what I read is that the maximum tax to pay on a large house is £3K. I'd love to have property/council tax that low (it would cut our tax bill in half). And we live in a 1200 feet^2/112 m^2 shoebox. Granted, Redmond, WA ain't cheap, but even someplace out in the sticks is going to be at least that much if one decides on the 4000 sq. ft. McMansion. So which part of my reading comprehension failed? :-)
    - ljf 3y ago
      Sorry - poorly written - I was continuing on 'in my mind, we brits pay more'
      - mikestew 3y ago
        Ah, got it; makes much more sense now. Thanks for the clarification.
    - rwmj 3y ago
      Council Tax really should be more (speaking as someone who would be affected). Council funding has been massively cut back by central government resulting in a lot of problems at the local level.
  - svachalek 3y ago
    Tax on a 4 bedroom house in Silicon Valley bought recently probably runs about $20,000 per year on average. Granted this is one of the highest in the US but I don't know anyone with property tax that low.
  - sys_64738 3y ago
    But the problem is that you live in England while I live in America. I used to live in England and happily pay more real estates taxes for the privilege of living in the USA.
    - ljf 3y ago
      Good for you. My point was that the 'story of America' is low tax and freedom. Low tax no longer seems to be true (or is it?) and freedom is debatable.
      - sys_64738 3y ago
        America isn't the same as Britain as there's no uniform tax code except at the federal level. Think of the US like the EU where it has individual states that have their own tax burden which can be low or substantial. It all depends where you live. In terms of freedom, what is your definition of freedom? That needs to be understood first.
- Wistar 3y ago
  Yes. My property taxes have gone from about $450/mo to about $1,250/mo in 18 years.

legitster 3y ago

I had an economics professor who commented offhand that, while we spend so much energy debating wealth transfer from rich-to-poor (or vis versa), the entire US economy is functionally built to transfer wealth from young to old. Part of the reason affordability is so bad is that we have one of the largest, wealthiest population of non-working adults (retirees) that has ever existed in the world ever. And US financial policy specifically encouraged real-estate to be a primary vehicle for that wealth.

psychlops 3y ago
I came here to say this, but you said it way better. I don't think it is understood enough that the older population is getting and keeping wealth at an accelerated rate. The entire concept of 30 year treasury bonds transfers debt of the current generation onto the next and nobody seems to question it. Younger generations just understand that the system is rigged and have looked for other methods (socialism) to even the playing field again. They aren't wrong in their goals, but current proposals are sadly ignorant.
jackcosgrove 3y ago
The situation is more acute in developed countries where older people outnumber younger people. There is very little likelihood of reform in those places.
xnx 3y ago
> we have one of the largest, wealthiest population of non-working adults (retirees) that has ever existed in the world ever This is an interesting topic that doesn't seem like it gets a proportional amount of attention. What becomes of those assets as that generation gets too old to live in their own homes or dies? For retirees that have chosen to "age in place" in their oversized homes (i.e. built for 4-5 people, but now holding 2), what becomes of those properties. This is one way the housing "crisis" could sort itself out.
PopAlongKid 3y ago
> the entire US economy is functionally built to transfer wealth from young to old. Until the old die, which they inevitably do, and then the transfer completes the cycle back to the young. >largest, wealthiest population of non-working adults (retirees) What does that have to do with affordability? Most of the current income of these "retirees" is based on the work they did earlier in life (Soc. Security[0], 401k/IRA withdrawals). Further, you seem to be conflating "non-working" with being non-paid. Many of these retirees are providing unpaid daycare to grandchildren, unpaid assisted living service to other elder family members, or volunteer positions in the community. [0]Yes, I understand that today's Soc. Security is funded mostly by today's wage earners, but not all of it. On an inflation adjusted basis, a good chunk of Soc. Sec. benefit is just the taxpayer's own FICA taxes that have been earning interest over time coming back to them, as well as the income taxes they pay on those very same Soc. Security benefits.

superkuh 3y ago

>Missing from this story is a third, even more fortunate group: the rapidly growing number of Americans who own their homes outright. Missing from this story is a fourth, the even less fortunate group: the rapidly growing number of Americans who have never owned a home and know better than to try. The growth of this group is likely what's causing the growth in the relative proportion of home owners who are mortgage free.

brightball 3y ago
Plenty of opportunities. Just might be in areas with lower populations. Combined with remote work…
- runeofdoom 3y ago
  A lot of areas with lower population do not have the requisite internet infrastructure to support remote work. And the ones that do have seen their housing prices shoot up.
  - ghaff 3y ago
    I question how true that is at this point. Even Starlink seems pretty suitable for most remote work scenarios at this point. (Though TBF Starlink is a game-changer in that respect. My brother's house would have been very marginal for remote working before Starlink came along.)
drivebycomment 3y ago
https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N shows the overall home ownership has been going up since 2016, currently around 66% though still lower than peak 69% in 2014, but higher than 63% in 1965.
- superkuh 3y ago
  I think you're confused. I'm talking about the proportion of human people that own a home. Your link and plot is talking about the proportion of homes the owner lives in. >"The homeownership rate is the proportion of households that is owner-occupied."

whobre 3y ago

A bad title. I am mortgage-free because I rent and I don’t belong there. Should be: “The Share of American Homeowners…”

all2 3y ago
I see this sort of thing crop up when people talk about 'home owners' as well. It's like the classification isn't narrow enough to be relevant. I want to know the percent of people living in homes who don't have a mortgage. Ah, here we go, according to Forbes [0], only 23% of home "owners" don't have a mortgage, as in they actually own their homes. This is among the lowest rate of actual ownership in the first world. Conclusion from the Forbes article: It seems U.S. policy maximizes mortgage-ownership, not home-ownership. [0] https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-lowest-percentage-of-households-that-own-their-homes-without-mortgages/?sh=5fe2b18b3124 https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-...
- kelnos 3y ago
  > This is among the lowest rate of actual ownership in the first world. I don't know if this is as big a problem as it sounds. I could pay off my mortgage next week if I wanted to, but "renting" money from a bank for 2.6% while getting 5.4% on short-term Treasury bills seems a lot more financially responsible than paying down a mortgage just because it feels good to be debt-free. Certainly not everyone can do this, and there are lots of people (especially those who are buying now) with interest rates that are higher than what they can safely and predictably make to offset that cost. But just saying "X% of American homeowners carry a mortgage" doesn't tell the whole story.
  - ghaff 3y ago
    I paid off a mortgage a number of years back and the numbers probably marginally made sense. The debt-free thing probably pushed it over the edge. But if I had a ten year old mortgage today? No way would I be paying it down today.
- ghaff 3y ago

jackcosgrove 3y ago

Between the long-term shortfall in new construction, the number of mortgage holders with rock bottom rates, and the number of homes owned free and clear, I don't see a big fall in prices as we saw in 2008-2010 anytime soon. Unemployment would have to be horrifically bad to dislodge current mortgage holders in numbers that could cause house prices to fall like back then.

carlosjobim 3y ago
I'd agree with you if people lived forever.
- ZoomerCretin 3y ago
  The population is growing far faster than housing is being built. It's not a matter of waiting for people to die.
  - carlosjobim 3y ago
    That's not true anymore, most of the world has no population growth: https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?view=map https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?view=map
    - ZoomerCretin 3y ago
      We are on an article talking American homeownership. America is projected to continue growing through the rest of the century due to immigration.
      - carlosjobim 3y ago
        And these immigrants can afford the houses that native Americans can't afford?

joshstrange 3y ago

I'm debt free except for my mortgage (and my CC but that's temporary and I never carry a balance) but I have a hard time seeing why I'd want to pay off my mortgage. My mortgage is at 2.25% and my savings account gives me 5%. At this point (especially with the market not really doing awesome) why wouldn't I just dump any extra money I have into my savings? I mean that's not really a question and it's what I've been doing for a while now. Even before they raised interest rates I was getting 3% on my savings. A part of me would love to throw money at my principal but oddly paying off that debt would be financially irresponsible in the long run.

xnx 3y ago
> My mortgage is at 2.25% and my savings account gives me 5% This is a great situation to be in. You should not be making any extra mortgage payments that you don't have to.
theandrewbailey 3y ago
Risk. Where have you factored the risk? Let's pretend you have your house paid off. Would you borrow against your fully paid-off house at 2.25% interest to put into a savings account at 5% return? The terms involve someone else owning part of your house, and could force you out if they don't get paid. Does that sound like a good plan to you? If you don't think it is, that's risk, but that's what you're effectively doing right now.
- leoqa 3y ago
  > 2.25% interest to put into a savings account at 5% return Sure, that seems rather savy to me. The only problem is I can’t guarantee 5.5%
  - ghaff 3y ago
    At the moment--though it likely won't last--you can get 5% on very low risk investments primarily in treasuries.
    - 3y ago

deleted 3y ago

[deleted]

ZoomerCretin 3y ago

Is this not simply a function of Americans growing older than ever?

mikewarot 3y ago

As one of the very lucky people who have a house with no mortgage, it's only that fact that has kept me away from homelessness in the past 3 years after getting long covid, and being yeeted out of the work force permanently. We own the absolutely cheapest house in town. But it drives me nuts that the house has tripled in "value" since we bought it a decade ago, just because of the market. Our child is still a teen, but having a home passed down will greatly help secure their future, should we both be able to avoid medical bankruptcy that gets so many Americans on their way to aging out.