6 ms·

And how many percent of US homeowners are mortgage-free?

ChicagoBoy11 3y ago
I 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!
- deleted 3y ago
  [deleted]
code_runner 3y ago
this 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?
- kelipso 3y ago
  One person owning multiple homes..
  - pavlov 3y ago
    Or a company owning hundreds of homes.
- hanman999 3y ago
  A home owner might own multiple homes
  - deleted 3y ago
    [deleted]
- Pigalowda 3y ago
  Blackrock and other funds buy thousands of homes and rent them out. Those are mortgage free homes.
  - deleted 3y ago
    [deleted]
  - hondo77 3y ago
    Why would they pay cash instead of getting big loans for multiple properties at a favorable rate?
    - k1t 3y ago
      You can still finance the properties with debt, without it being a mortgage. For example, taking out a single large loan, then using that to purchase many properties with "cash".
  - c22 3y ago
    You're probably thinking of Blackstone which spunoff from Blackrock in the 1980s. Further reading: https://www.blackrock.com/us/individual/insights/buying-houses-facts https://www.blackrock.com/us/individual/insights/buying-hous... https://www.blackstone.com/housing/our-track-record-in-housing/ https://www.blackstone.com/housing/our-track-record-in-housi... https://www.helpadvisor.com/retirement/blackrock-vs-the-blackstone-group-where-should-you-invest https://www.helpadvisor.com/retirement/blackrock-vs-the-blac... https://fintel.io/news/blackrock-now-owns-490-of-blackstone-bx-406 https://fintel.io/news/blackrock-now-owns-490-of-blackstone-...
    - Pigalowda 3y ago
      If it’s such an infinitesimally small portion then why defend the position instead of just shedding the assets? I don’t trust their whitewashing at all. Blackfund should sell but they won’t until they’ve extracted the blood they think they deserve.
    - r00fus 3y ago
      A distinction without a difference - they're both in the same rent-seeking model.
      - c22 3y ago
- IKantRead 3y ago
  I have a few friends who had major liquidity events happen to them and they each own 3-5 homes as investment homes. I believe these properties were paid full in full and in cash, so no mortgage. This small proportion of my friends is mortgage free, but they own multiple houses so a fairly large proportion of my friends houses are mortgage free.
dzdt 3y ago
Should be around 40%. The headline graph in the article has its data source as "Among owner-occupied housing units; Annually, 2012-2022". There shouldn't be much difference between percent of owner-occupied homes that are mortgage free and percent of homeowners who are mortgage-free.
- deleted 3y ago
  [deleted]
- crotchfire 3y ago
  Wealthy people tend to have second homes, which are also considered "owner-occupied".
onlyrealcuzzo 3y ago
~67% of homes are owner occupied. It's unlikely ~100% of the investor owned homes are free and clear and only ~3% of owner occupied homes are owned free and clear. For one, the tax code HEAVILY incentivizes investors to own property on leverage. For two, the only reason property is/was a good investment was because of artificially low interest rates for most of the last ~25 years (an entire generation of investors). When you combine that with a leveraged bet that cannot be margin called, you will make a FORTUNE (and many did). Leverage was the way. I'm willing to bet the majority of free and clear owned homes are owner occupied (simply because 2/3rds of homes are owner occupied).
- victor106 3y ago
  > he tax code HEAVILY incentivizes investors to own property on leverage How? any resources I can find on this topic?
  - FooBarBizBazz 3y ago
    I think this is referring to -- 1. The mortgage interest deduction (reduced under Trump, of all presidents). 2. 1031 Exchange elections, which let you avoid capital gains.
    - ryandrake 3y ago
      > The mortgage interest deduction (reduced under Trump, of all presidents). The way I understand it, reducing the mortgage interest deduction disproportionately affected homeowners with higher mortgages in high cost of living areas, just like reducing the SALT deduction affected people in higher income tax/cost of living areas. Both of these were likely supported by President Trump to punish "blue staters" in these areas.
- jjav 3y ago
  > the tax code HEAVILY incentivizes investors to own property on leverage Can you expand on this claim? Mortgage interest deduction is often talked about but realize that unless you itemize deductions you can't do it, and itemizing has been made very difficult so most people won't qualify[1]. There are many good reasons own your home, but tax code benefits is not one of them. [1] https://taxfoundation.org/blog/standard-deduction-itemized-deductions-current-law-2019/ https://taxfoundation.org/blog/standard-deduction-itemized-d...
notaustinpowers 3y ago
It's an older story (from May) but it looks like only about 23% of US homeowners are mortgage-free. Although they were also including renters in this analysis. (https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-lowest-percentage-of-households-that-own-their-homes-without-mortgages/?sh=20c5b9b73124 https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-...) I couldn't find anything that specifically looked only at homeowners, rather than at homes themselves.
deleted 3y ago
[deleted]

I 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!

deleted 3y ago
[deleted]

code_runner 3y ago

this 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?

kelipso 3y ago
One person owning multiple homes..
- pavlov 3y ago
  Or a company owning hundreds of homes.
hanman999 3y ago
A home owner might own multiple homes
- deleted 3y ago
  [deleted]
Pigalowda 3y ago
Blackrock and other funds buy thousands of homes and rent them out. Those are mortgage free homes.
- deleted 3y ago
  [deleted]
- hondo77 3y ago
  Why would they pay cash instead of getting big loans for multiple properties at a favorable rate?
  - k1t 3y ago
    You can still finance the properties with debt, without it being a mortgage. For example, taking out a single large loan, then using that to purchase many properties with "cash".
- c22 3y ago
  You're probably thinking of Blackstone which spunoff from Blackrock in the 1980s. Further reading: https://www.blackrock.com/us/individual/insights/buying-houses-facts https://www.blackrock.com/us/individual/insights/buying-hous... https://www.blackstone.com/housing/our-track-record-in-housing/ https://www.blackstone.com/housing/our-track-record-in-housi... https://www.helpadvisor.com/retirement/blackrock-vs-the-blackstone-group-where-should-you-invest https://www.helpadvisor.com/retirement/blackrock-vs-the-blac... https://fintel.io/news/blackrock-now-owns-490-of-blackstone-bx-406 https://fintel.io/news/blackrock-now-owns-490-of-blackstone-...
  - Pigalowda 3y ago
    If it’s such an infinitesimally small portion then why defend the position instead of just shedding the assets? I don’t trust their whitewashing at all. Blackfund should sell but they won’t until they’ve extracted the blood they think they deserve.
  - r00fus 3y ago
    A distinction without a difference - they're both in the same rent-seeking model.
    - c22 3y ago
IKantRead 3y ago
I have a few friends who had major liquidity events happen to them and they each own 3-5 homes as investment homes. I believe these properties were paid full in full and in cash, so no mortgage. This small proportion of my friends is mortgage free, but they own multiple houses so a fairly large proportion of my friends houses are mortgage free.

dzdt 3y ago

Should be around 40%. The headline graph in the article has its data source as "Among owner-occupied housing units; Annually, 2012-2022". There shouldn't be much difference between percent of owner-occupied homes that are mortgage free and percent of homeowners who are mortgage-free.

deleted 3y ago
[deleted]
crotchfire 3y ago
Wealthy people tend to have second homes, which are also considered "owner-occupied".

onlyrealcuzzo 3y ago

~67% of homes are owner occupied. It's unlikely ~100% of the investor owned homes are free and clear and only ~3% of owner occupied homes are owned free and clear. For one, the tax code HEAVILY incentivizes investors to own property on leverage. For two, the only reason property is/was a good investment was because of artificially low interest rates for most of the last ~25 years (an entire generation of investors). When you combine that with a leveraged bet that cannot be margin called, you will make a FORTUNE (and many did). Leverage was the way. I'm willing to bet the majority of free and clear owned homes are owner occupied (simply because 2/3rds of homes are owner occupied).

victor106 3y ago
> he tax code HEAVILY incentivizes investors to own property on leverage How? any resources I can find on this topic?
- FooBarBizBazz 3y ago
  I think this is referring to -- 1. The mortgage interest deduction (reduced under Trump, of all presidents). 2. 1031 Exchange elections, which let you avoid capital gains.
  - ryandrake 3y ago
    > The mortgage interest deduction (reduced under Trump, of all presidents). The way I understand it, reducing the mortgage interest deduction disproportionately affected homeowners with higher mortgages in high cost of living areas, just like reducing the SALT deduction affected people in higher income tax/cost of living areas. Both of these were likely supported by President Trump to punish "blue staters" in these areas.
jjav 3y ago
> the tax code HEAVILY incentivizes investors to own property on leverage Can you expand on this claim? Mortgage interest deduction is often talked about but realize that unless you itemize deductions you can't do it, and itemizing has been made very difficult so most people won't qualify[1]. There are many good reasons own your home, but tax code benefits is not one of them. [1] https://taxfoundation.org/blog/standard-deduction-itemized-deductions-current-law-2019/ https://taxfoundation.org/blog/standard-deduction-itemized-d...

notaustinpowers 3y ago

It's an older story (from May) but it looks like only about 23% of US homeowners are mortgage-free. Although they were also including renters in this analysis. (https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-lowest-percentage-of-households-that-own-their-homes-without-mortgages/?sh=20c5b9b73124 https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-...) I couldn't find anything that specifically looked only at homeowners, rather than at homes themselves.

deleted 3y ago

[deleted]