NEW YORK–Amidst all the other reports of people struggling to buy homes, there is another growing group that is being overlooked—the percentage of Americans who own their homes outright—according to a new report.
The share of U.S. homes that are mortgage-free increased five percentage points from 2012 to 2022, to a record just shy of 40%, Bloomberg reported. More than half of these owners have reached retirement age.
Homeowners who no longer carry a mortgage also present a different challenge for credit unions in terms of what they may need from their CUs.
Bloomberg noted that many of those homeowners took advantage of interest rates on 30-year mortgages dropped into the single digits in the early 1990s, which then continued to drift lower into the current decade, allowing “millions of American homeowners to refinance their loans multiple times. Many borrowers were able to switch into shorter-term mortgages without jacking up their monthly payments, allowing them to pay off their loans at an accelerated rate,” Bloomberg stated.
The report further noted that as rates dropped, real estate prices simultaneously surged.
The Role of Boomers
Citing Census Bureau data, Bloomberg reported the number of mortgage-free, single-family homes and condos increased by 7.9 million from 2012 to 2022, to 33.3 million.
“As Baby Boomers age, they’re snapping up—or holding on to—a larger share of homes overall,” Bloomberg stated. “Of the 84.6 million owner-occupied homes that existed in 2022, almost 33% were owned by people age 65 or older, a 4.6-percentage-point increase from 10 years earlier.”
The state with the largest share of homes owned outright is West Virginia, at almost 53%. The median price of a home there was $157,498 in October, the lowest of any state, according to Zillow Group Inc.
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