An increasing number of Americans have realized the dream of owning a home without the burden of a mortgage.
Nearly 40% of homeowners in the country now own their homes outright, marking a record high in mortgage-free ownership as of 2022, BloombergreportedFriday (Nov. 18).
This trend is particularly prominent among baby boomers, who capitalized on low interest rates to refinance their mortgages, according to the report. By refinancing multiple times over the years, these homeowners lowered their interest rates and accelerated their loan payments. Consequently, they now enjoy the freedom to age in place or relocate to more desirable locations.
Interest rates on 30-year mortgages plummeted into single digits in the early 1990s and continued to decrease until earlier in this decade, the report said. This allowed homeowners to refinance and switch to shorter-term mortgages without significantly increasing their monthly payments.
The number of mortgage-free homes in the U.S. soared by 7.9 million from 2012 to 2022, reaching a total of 33.3 million, per the report. This growth is largely driven by the aging baby boomer population, who are acquiring or holding onto a larger share of homes overall. In fact, individuals aged 65 or older owned almost 33% of owner-occupied homes in 2022, a 4.6-percentage-point increase from a decade earlier.
While some mortgage-free boomers choose to remain in their homes, many are opting to sell their properties in expensive regions and utilize the proceeds to purchase homes in more affordable areas, according to the report.
The Sun Belt has witnessed a significant surge in new home construction, with a high proportion of mortgage-free homes, the report said. In fact, 29% of the 4.1 million new homes built in the U.S. from the start of the pandemic through 2022 were located in Florida and Texas.
Despite some personal finance professionals advising against paying off a mortgage early, favoring investment instead, many homeowners find intrinsic happiness and reduced stress in being mortgage-free, per the report.
The experience of those who purchased their homes years ago is far different from those who are looking to do the same today.
It was reported in September that new homes are “completely unaffordable” now that 30-year fixed-ratemortgagescarry rates of around 7%, compared to 3% in 2021.
Purchasing a home right now is “completely unaffordable for the typical American household because you’re mixing the higher borrowing costs with the high prices,”Mark Zandi, chief economist atMoody’s Analytics,told The Wall Street Journal in September.
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FAQs
In 2022, nearly 40% of U.S. homeowners owned their homes outright, according to Census Bureau data analyzed by Bloomberg. In total, 33.3 million single-family homes and condos were mortgage-free, a 31% increase compared to 25.4 million homes a decade ago.
What percent of Americans have their house paid off? ›
Thus, it's not uncommon for Americans to want to pay that debt down as fast as possible. In fact, according to Census Bureau data, nearly 40% of Americans already have. But are you really better off paying off your home mortgage, or are there strategies you can employ to put yourself ahead even more?
What percentage of Americans outright own their homes? ›
Almost 40% of US homeowners own their homes outright as of 2022—many of them baby boomers who refinanced when rates were low.
How much equity do most Americans have in their home? ›
According to the February 2024 ICE Mortgage Monitor report, the average homeowner currently has about $299,000 in home equity, about $193,000 of which is tappable home equity. Keep in mind that the above is the average equity American homeowners have, so yours may be higher or lower depending on a range of factors.
What is the average age Americans become mortgage free? ›
Mortgage-Paying Habits of Average Americans
For example, according to the Census Bureau, fewer than 28% homeowners below retirement age have paid off their homes completely, as opposed to almost 63% of those 65 or older. That makes sense, of course, as older Americans have had a longer time to make payments.
What percent of Americans are debt free? ›
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more. The exact definition of debt free can vary, though, depending on whom you ask.
What percentage of Americans pay cash for their home? ›
All-cash real estate transactions are on the rise, representing 34.1 percent of U.S. home purchases in September 2023, according to Redfin data. Most typical buyers, especially younger first-time homebuyers, can't afford to pay in cash, putting them at a greater disadvantage.
What is the share of Americans mortgage free all time high? ›
While prospective homebuyers are grappling with still-elevated mortgage rates, a growing share of Americans are enjoying being mortgage-free. In 2022, nearly 40% of U.S. homeowners owned their homes outright, according to Census Bureau data analyzed by Bloomberg.
What percentage of Americans don't own property? ›
64% of Americans own real estate. 35% of the American population does not own their own homes.
How many homes does the average American own in their life? ›
In fact, the average person will own at least three houses in their lifetime. Living in one place for most of your life may or may not be your goal, but if it is, there are things you must do as a homeowner to ensure your home lasts as long as you'd like it to.
Key Takeaways. The median savings account balance for all families in the U.S. was $8,000 in 2022. Generally, higher-income earners and older individuals save more than younger ones. Some experts suggest three to six months' living expenses as a goal.
What is the average US household net worth? ›
Both median and average family net worth surged between 2019 and 2022, according to the U.S. Federal Reserve. Average net worth increased by 23% to $1,063,700, the Fed reported in October 2023, the most recent year it published the data. Median net worth, on the other hand, rose 37% over that same period to $192,900.
How much does the average American owe on their home? ›
How much mortgage debt does the average American have? The average mortgage debt among Americans is $244,498, per Experian's 2023 State of Credit Report. That's up from the average mortgage debt reported by Experian in 2022: $232,545.
At what age should you no longer have a mortgage? ›
You should aim to have everything paid off, from student loans to credit card debt, by age 45, O'Leary says. “The reason I say 45 is the turning point, or in your 40s, is because think about a career: Most careers start in early 20s and end in the mid-60s,” O'Leary says.
Can a 55 year old get a 30-year mortgage? ›
You Can Get a 30-year Mortgage at Any Age
You could be 99 years old and get a 30-year mortgage as long as you qualify. The lender may not deny a loan because they don't think you'll live long enough to pay it off. But the law addresses more than just the age at which you apply.
How long does it take the average American to pay off their house? ›
Homeowners typically make their normal monthly mortgage payments and expect to pay off their homes over 30 years.
