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Nearly 40% of U.S. homes are mortgage-free, census shows
- cheschire 3y agoInteresting introduction for a missing article. And that graph… maybe the funniest part is when they chose to only represent a single decade and then note that one of those ten years doesn’t even have data.
- jncfhnb 3y agoNot really. A ten year trend is decently long and the one missing year in a monotonically increasing trend is unlikely to affect your understanding
- lesuorac 3y agoIIUC, it's because the data only goes back to 2010. https://data.census.gov/table?q=Owner-occupied%20units%20without%20a%20Mortgage&g=010XX00US https://data.census.gov/table?q=Owner-occupied%20units%20wit...
- jeffbee 3y agoIs the value according to the survey participant?
- sokoloff 3y agoThey are census questions, which the census responder fills out: https://www.census.gov/acs/www/about/why-we-ask-each-question/ownership/#:~:text=We%20ask%20about%20whether%20a,about%20rent%20and%20home%20value https://www.census.gov/acs/www/about/why-we-ask-each-questio.... (There's a blue-green box midway down the page that you can expand to see the actual questions.)
- jeffbee 3y agoI see, thanks! It seems like the valuation would suffer from the same problem as "owner imputed rent" component of BLS consumer price index surveys. People who haven't been in the housing market for 30+ years have no idea what the house is worth.
- pers0n 3y agoHow many were houses bought with a scant PPP loan that never has to be paid back
- jryb 3y agoThere's a pretty consistent slope in the plot since 2012, and the steepest point was in 2012-2013, so it's probably negligible relative to other factors.
- sonicanatidae 3y agoHEY! They earned that! Now shut up and pay back your $130k worth of predatory and usurious student loans, freeloader.
- WarOnPrivacy 3y agoWell sure. The homes my landlord rents are mortgage free. I can say the same for folks I know with 2nd vacation homes and airbnb rentals. For the rest of my anecdata: For folks I know living in their own households, about 20% have it paid off. About half of those folks own multiple homes.
- bonyt 3y agoThis specifies owner-occupied.
- WarOnPrivacy 3y agoAppreciate the clarification. I was on my way out and didn't read thru.
- presidentender 3y agoA landlord who doesn't use leverage is in the wrong asset class. Even if they'd somehow paid off the property before, anyone who didn't pull out cash when rates were below 5% and invest it elsewhere is a fool.
- postalrat 3y agoThis explains why they own many mortgage free houses and you do not.
- presidentender 3y agoTrivially, yes: I invest with borrowed funds, while the hypothetical free-and-clear landlords in the previous example have paid back their loans.
- michaelt 3y ago> For folks I know living in their own households, about 20% have it paid off. Sure - if you're 25 and most of your friends are aged 20-35, probably <40% even own a home. And those that do are probably <10 years into paying it off. Hell, a few years ago when interest rates were zero I heard a lot of people saying it was a bad idea to pay off your mortgage early, and far more sensible to invest the money instead. So even if the people your age got a big cash windfall, they might not have paid off their mortgage. On the other hand, if you know a bunch of 65-year-olds who've had maybe 40 years to pay off their mortgage, and 40 years of inflation on their side shrinking the principal? It's probably a different story.
- jeffbee 3y agoOn alternate days we discuss the fact that REITs buy homes for cash.
- fortran77 3y agoIn the article they specify "owner occupied."
- _ea1k 3y agoInteresting, given all of the articles about increasing consumer debt. I'd guess that a lot more people are motivated to do this, with mortgage rates fluctuating upward so quickly over the last couple of years.
- NeutralCrane 3y agoOr it just could be more polarization between the haves and have nots in the economy. Fewer in the younger generations can afford housing than previous generations could at that age, so the pool of US homeowners is going to skew to the older, more financially established boomer generation who bought homes decades ago for much cheaper.
- oblio 3y agoIs there some sort of metric/data/graph for housing concentration? I'd imagine older people might have several properties if many of them bought a main residence, a summer home, etc, 30+ years ago when they were somewhat cheap.
- dublinben 3y agoThere’s a clear correlation between age and homeownership. The data is relatively stable over time though. https://www.census.gov/housing/hvs/data/charts/fig07.pdf https://www.census.gov/housing/hvs/data/charts/fig07.pdf
- mrfox321 3y agoThis is my belief as well. In California, the haves will have houses. The have nots will have ADUs. Our world is structuring itself to (more) obviously reveal the wealth disparity.
- IKantRead 3y agoAs this other comment pointed out [0] 40% of homes are mortgage free, but that says nothing about home owners. Anecdotally I know that none of my neighbors are mortgage free. However I also have a few friends that had major cash windfalls things like startup exits or time working in hedge funds, each of them owns 3-5 houses outright as investments. So, with this small sample I can easily see that of the total number of homes owned by friends/neighbors, 40% being mortgage free sounds about right, but far less of my friends/neighbors are mortgage free. 0. https://news.ycombinator.com/item?id=38612670 https://news.ycombinator.com/item?id=38612670
- schnable 3y agoMore evidence that there are a lot of baby boomers.
- 1-6 3y agoI don’t know if this is true evidence but you have to wonder what the market will look like once Boomers need to vacate their homes, only to see a market where old millennials who don’t have much working life left decide never to buy their first home.
- fullstop 3y agoI'm between gen x and millennial and own my home outright. The plural of anecdote is not data, but this isn't something that most people discuss with each other.
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- willsmith72 3y ago> "If you stick with it, you'll get a low rate," he tells Axios. I love this kind of advice. It's so typical from someone who thinks they're self-made with no appreciation for their circumstances
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- jjav 3y agoI think you misunderstand the comment, it is a reference to how mortgages work in the US (I know not in most other countries). You can keep ratcheting your interest rate down over the years, but it will never go up. When interest rates rise, you sit tight. When they drop, you keep refinancing.
- vintermann 3y agoAnd how many percent of US homeowners are mortgage-free?
- ChicagoBoy11 3y agoI suspect this comment will be severely underrated, but it conveys such a deep insight into the right way to think about this. This is the variable we really care about!
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- code_runner 3y agothis is an interesting distinction but I don't know enough to totally wrap my head around it. Can you expand a bit on how a home would have no mortgage but that same homeowner would?
- lo_fye 3y agoTranslation: Nearly 40% of US homes are mortgage-free (and owned by Boomers)
- onlyrealcuzzo 3y agoTranslation: ~30% of homes have been owned for more than 20 years, and guess what happens at the end of a mortgage and after 20 years of inflation? And guess how much money the top 10% have? Close to $2m counting their house... You'll be old one day, too - believe it or not. The boomers aren't special. They're just old. One day they'll be dead, and you'll be the old person everyone complains about who owns their house and bought if for next to nothing 30 years ago.
- solumunus 3y agoThe boomers bought these houses for much less (proportional to their income) than people buying today. By quite a large margin. So yes, they’re special in that sense. People today won’t be nearly as well off in 30 years as the boomers were in a comparable timeframe. If current trajectory continues the kids in 30 years will be rioting, not complaining.
- onlyrealcuzzo 3y ago~87% of purchases are financed. Back then it was probably higher. Interest rates were >13% when my boomer next-door neighbor bought her house 30+ years ago. Payments weren't much different in tax-adjusted terms than then just a few years ago. ~87% of people are buying a mortgage payment - not the sticker price on the home. Mortgage payments are VERY high right now with respect to interest rates. Not long ago, at the beginning of the pandemic - they were quite low. Either prices will come down - or much more likely - interest rates will go back down or - less likely - incomes will go up (or a combination of the 3). Kids 30 years from now will be complaining. Song as old as time.
- ryandrake 3y ago> One day they'll be dead, and you'll be the old person everyone complains about who owns their house and bought if for next to nothing 30 years ago. How are these mythical "young but future homeowners" going to get a house? They're not buying them at today's prices and interest rates. And their Boomer parents are drawing down the equity via reverse mortgages to fund their retirements, so there won't even be equity to inherit when they kick the bucket. My bet is when the Boomers are dead, the only ones left owning homes will be banks and private equity firms, and we'll all be renting from them.
- bodeadly 3y agoI have a crazy theory: Zillow is directly responsible for the housing shortage and high home prices. Zillow inspires people to move. More moving means houses get fixed up which increases home values. Browsing through homes on Zillow might start out as something to do when your bored but that can easily lead to "what if" thinking. Before Zillow they wouldn't even be thinking about moving.
- fred_is_fred 3y agoAgree that Zillow and similar make it much easier and top of mind. Home flipper shows on HGTV are also part of the equation since it looks very simple and like guaranteed profit.
- FireBeyond 3y ago"You put $40,000 into your kitchen and bathroom remodel, so that will increase the value $100,000". There's definitely value for opportunity cost, but oh boy do some of those shows exaggerate it to the point of absurdity. Especially when it's a builder-grade remodel.
- giantg2 3y agoI'm not sure anyone is doing that when they're bored without some level of genuine interest.
- headcanon 3y agoInteresting idea, I would argue the opposite on the basis that easier, more frequent transactions in a market improves price discovery and keeps the housing price closer to the "true" price based on supply and demand.
- keeganjw 3y agoThe US has not built enough homes to meet demand for over 30 years which is by far the biggest factor in high housing prices. Zillow is not causing people to move more, the number of Americans moving each year is reaching record lows. High housing prices mixed with high interest rates is causing people to stay put because the cost of buying another home is much more costly. You have to go from your old low-interest mortgage to a high-interest one and high housing prices means realtor fees are also sky-high.
- diffeomorphism 3y agoIn other news, older people are older. The median age in the US is 38.8 and for homeowners you can even throw out basically anyone under 20 (teens commonly don't own homes [citation needed]), so the median homeowner might be like 50. So it is not clear at all that this statistic says anything other than "40% of home owners are over the age of 60" (or the homes are owned by corporations, which makes this a quite useless statistic).
- r00fus 3y agoIn other news, nearly 40% of homes are owned by corporations.