Thursday, March 30, 2006

Ask Yahoo: How many "homeowners" own their homes outright?

Yahoo has this section called Ask Yahoo. On it I found this question and answer.

Dear Yahoo!:

How many "homeowners" own their homes outright?


Thomas
Joplin, Missouri

Home ownership is the American dream. Unfortunately, soul-sucking mortgages are often the reality. At the risk of pointing out the obvious, there's a big difference between owning a home outright and slaving away over a 30-year fixed. So, of all the so-called "homeowners" in the United States, how many actually own their homes?

Maybe we're just pessimistic, but the number was higher than we expected. According to a 2001 study by the Census Bureau and the Department of Housing and Urban Development (HUD), "nearly 40 percent of all residential properties in the United States, owner-occupied and rental units, are not mortgaged but are owned free and clear." For a country so often criticized for its debt, that's not a bad figure.

Those who wish to learn more about the demographics of the average American homeowner (be it person or corporate entity) can skim the report's 368 pages of scintillating facts and figures. One factoid that stood out to us -- from 1991 to 2001, the amount of outstanding mortgage debt on single-unit properties rose from $1.62 trillion to $3.48 trillion. America's housing boom was apparently a good time to be in the mortgage business. Go figure.

33 comments:

  1. Lord, wouldn't it be a great thing for the American economy if home prices came down far enough to actually have a prayer of paying off the mortgage in one's lifetime again.

    Can you imagine all the REAL money (vs. CC and HELOC debt) that could eventually be poured back into the economy if people weren't strapped to these ridiculous mortgage payments?

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  2. Anon, your comment about "real" money shows a lack of understanding of economics. I'm not sure what makes you think "real" (i.e., not borrowed) money is a good thing for the economy. A central idea of macroeconomics is the money multiplier, which shows that the vast majority of the money supply out there is not "real" money but rather the effect of "real" money that is lent to banks and then re-lent back out into the economy.

    Sure, a small or even negative savings rate is usually a bad thing, and I would agree that people owing 100% of their home value isn't good in the long run. But conversely, I would argue that having 100% equity in your home isn't optimal, either. As long as the interest rate on your house is lower than the expected return you'd get elsewhere (i.e., from stocks or bonds), most people would be better off being leveraged 50% or so in their home.

    Of course, this assumes that you can afford the mortgage payment on your house, which I think a lot of these zero-money-down people can't do. Everone's different, and some financial situations might make it preferable to pay off your house before investing elsewhere. But in most other cases, this predeliction towards owning your house outright is not usually the best option.

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  3. Their figure is from 2001. I think it may have changed dramatically since then. The bubble was just getting started in 2001.

    A Redskins fan

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  4. Any ideas as the the 2005 number?

    EricinDC

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  5. Del ray renter,

    Based on our currrent miserable savings rate, I believe the forced savings aspect of paying-off a mortgage is good. It is not optimal probably, given tax considerations and oportunity cost, but I think you give people too much credit by thinking that they will save and invest extra money.

    My experience, fwiw, is that people spend whatever "disposable" income that is available. VA_Investor.

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  6. The study noted that 40 percent of properties are 100 percent owned by individuals? I guess that sounds right.
    This tells me that American society is less mobile than we think. In many small towns and rural areas, houses are passed down through family generations.

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  7. No mortage on my townhouse in Connecticut- it makes life easier- you do not have to have a high stress job to live- however with taxes (2K a year, Condo Fee 1400.00 a year) plus upgrades and insurance- still costs money. I cannot fathom those with huge mortages for 30 years-

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  8. No one left me any free and clear property or any cash, for that matter. I wonder how many of those 40% inherited.

    Sky - I own my home, weekend place, and future retirement home free and clear. It is a comforting feeling. VA_investor

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  9. Wow...Mr. Anonymous did well under the Bush economy.

    A house.
    Weekend place.
    Retirement Home.

    All paid for! Wow! I wouldn't brag about your financial success to too many people.

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  10. Well that just hacks me off that I'm a 40 year old renter still paying off my f*cking student loans, by the time I got my hotsh*t MS Paki's were doing my job for 37 cents an hour so now I'm just a code monkey getting pounded in the mud flaps at the cube farm every day, and these bloated bong huffing boomers are free and clear their cribs.

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  11. I really struggle with the fact that because I did not buy a home, a reasonable home in my lifetime seems like a distant dream. Will prices ever get to a level where I too can buy something that I can call my own...or am Idestined the rest of my life to renter hell?

    Simmssays...
    http://www.AmericanInventorSpot.com
    AmericanInventorSpot.com

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  12. virginia investorMarch 31, 2006 9:41 AM

    I hate to sound like a broken record, but people need to lower their sights. A first home is just that - a starter home, not your dream home.

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  13. You can lead a horse to water, but you can't make it think. Buy anything fool! Buy a shoebox and live in it while you build some equity. Look around, you think anyone else is getting ahead doing anything else? As the man said: You make your choices and you take your chances. Why would you worry about property values? You aren't going to sell it now fool, you will be living in it. You can sell it later, and it isn't going anywhere. Work your way up by getting on the damn ladder. How stupid do you have to be to wonder how everyone else is making it when you haven't even bought your first place? America is a rigged game that virtually hands out money to anyone, repeat anyone, that buys a home. Do you even understand the tax code? It is inconceivable that someone could say that they can't afford a home, when within a one hour each way commute of downtown Washington DC you can by a perfectly good home for what a parking space costs in Georgetown. What, are you worried about gas prices fool? Or are you afraid that you will sacrifice your urban street cred by living in the sticks? Well, then don't complain that those who have paid the price show up buying in a few years where you're still renting. I guess there is one born every minute.

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  14. I remember reading a book about the average millionaire in the US. Came out about 10 years ago? In it it said that the average millionaire was a guy and gal in their 50's that owned their house in the suburbs and made something like $40,000 a year.

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  15. Starter home my ass you f*cking wankstains. I and my generation of IT/CS Masters of the Universe deserve 3,000 sf of granite, marble, stainless and plasmas goddammit. We are the smartest humans to ever walk the earth and cannot be expected to live in 1,800 sf $hitboxes that our parents settled for.

    Got it?

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  16. Renters can save just as much as homeowners, just lower your lifestyle. "Renter's Hell" is like paradise for me.
    A simple life, and money in the bank beats a mortgage and home "equity" that might not really exist.

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  17. surfer-x,

    ?????????????? rhetoric - i hope.

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  18. surfer-x is being ironic, I bet. I cannot wait for the great deflationary collapse.

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  19. Bring on the collapse is right. I can't wait to see those f*cking boomers sucking it hard and sucking it long. All of us gen-x Masters of the Universe will be stepping over pitiful, emaciated boomer bodies and their hideous spawn as we take posession of their McMansions. Even gen-x porn shop jizz moppers will soon be swingin' in bling.

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  20. The boomers think Gen-x will pay outrageous prices for their homes, but have they ever seen a typical Gen-Xer? They are rap "music" listening semi-retards. A pox on both their houses. I'd feed the worthless boomers to the useless Gen-Xers, then feed the Gen-Xers to the Mexicans in burritos.

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  21. Uh, excuse me. But, The study DOES NOT claim that 40% of American indivoduals who live in their homes own it. It asserts that "nearly 40 percent of all residential properties in the United States, owner-occupied and rental units, are not mortgaged but are owned free and clear."

    You must then ask who owns them? And how much of the American "home owner" population do they represent?

    In other words, this is not a statistic with a message, but a message sporting a statistic.

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  22. virginia investorApril 01, 2006 7:01 AM

    qrswave,

    Good point. Many people, including landlords, own multiple properties free and clear. This clearly skews the stats.

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  23. virginia investorApril 01, 2006 5:54 PM

    surfer-x,

    "forty year old renter" just about sums it up, doesn't it. We are in our mid to late 40's - not that much different from you.

    Except for the balance sheet and use of profanity and vulgarity. How about trying some cogent argument.

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  24. Cogent arguments about what exactly, Mr.Vagina Investor? About how I sat on the sidelines with my mouth gaping open like a slobbering f*cking baboon here in CA and watched with utter f*cking amazement as people bid up property to the point where I as a Master of the f*cking Universe cube farm code monkey will never in my life be able to afford a starter home? About how sales volume could plummet while prices remain the same, as they have in the past - 62% stanky-sales-dump = 0% price drop in the early 80's? Or maybe you wanna gogently talk about how lucky you were to buy and that the rest of us just need to piss on rented f*cking plumbing a few more years and we'll all be drinkin' that free Bubble-Up and eatin' that rainbow stew?

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  25. Nothing wrong with renting. I want to recieve interest, not pay it. I only buy houses for cash, and have done so several times.

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  26. I was left a small inheritance and although I was given a lot of advice to the contrary, used it to pay off my mortgage. I have a small home by most standards, but it's mine. And in the shifting economy, there is a certain amount of security in knowing no matter how bad things get, I will have a roof over my head for my family.

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  27. Oh, and as many of the Nasa engineers cheer about after moving here, the average 2000 sq ft three bedroom brick home here sells for an average of 135,000, much lower than most other states. For the price of a cracker box in California, you can have a mansion here.

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  28. I'm visiting Virginia from Australia and I am clearly in a very similar situation to that of Surfer-x. So Surfer-x, my commiserations, I feel it too. I am in rental hell and it sucks. And to the smug wealthy real-estate owners, yes, I’m a fool for not getting on the bandwagon 5-7 years ago simply for the financial gains and security. However life situations, relationships, and career are major factors that hindered my ability to make a (smart) house purchase. We all don’t get the breaks at the right times... and timing IS everything in this world. But all is not lost! We live in interesting times given probable major adjustments in the global economy on the way (resource sector being the headwind). Not even expert economists can predict the future, so you take your chances. I’m betting my bucks on a critical mass scenario in mid to late 2007. I have pumped all my savings into gold mining stock (I researched this topic in 2005-6) to leverage myself best I can (risks are reduced by global fundamentals and so mining stock become an ideal buy option of historical note). I also have little to lose.

    My stock are now up 100% from Nov’05 and vary +/-5% daily. Middle East geopolitics are only a short-term driver pushing prices but this diver is more of a smoke screen hiding the fundamentals. Conditions clearly indicate weaker house prices on average and I doubt there can be a soft landing because human beings are herd animals. The herd mentality keeps the system moving forward whether there is a precipice ahead or not. Taking advantage of price changes requires three things (1) information, (2) understanding, and (3) a capacity to act. The wealthy class can afford all three and therefore are most likely to take advantage of the change. The elite housing will continue to be strong because most the wealthy are financially insulated by their other investments.
    However the change could be unprecedented and many may be caught off guard. This situation suits the opportunist. I’m hoping for middle-class property devaluations across the USA and Australia. Q. who is going to pay for the 8.2 trillion debt? A. the mortgage owning taxpayer (via the banks) in concert with dollar depreciation (a direct consequence of fractional reserve banking or “printing more money”) and thence inflation.

    Surfer-x, beware, falling property prices could also bight renters as investors will attempt to recoup losses on asset deflation by raising their rents!! (b**t*rds). Leverage yourself now with resources, gold and energy and then buy property after the correction. Think like a vulture and feed off the corpses. Don’t be nice. In the medium term, think asset deflation (housing), dollar devaluation, inflation, and investor feedback. Upon my visit to the USA, I can clearly see that the US economy is huge, its national resources are truly impressive and the society is robust, determined and ambitious. I believe the US will bounce back and when it does it will be stronger and better. This will require more efficient use of resources and even smarter technologies.

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  29. Hey Anon: regarding "wouldn't it be great if house values go down..." blah blah blah:

    The reason "inflation" occurs is because the value of money is declining in the world market.

    Everyone's home is "worth" relatively the same amount* as it was 20 years ago.. the cost keeps "going up" because our dollar is less valuable.

    The only way for the cost of things to go down is to strengthen the dollar... and that cannot happen on the reserve system.
    I am not necesarily advocating gold standard tho... having a rubber check is useful as long as the writer is THE world power... but US war on terror is compromising that as well.


    The ONLY way out of this is teaching fiscal responsibility to a generation young enough to not be in debt already, and able to absorb good common sense... This of course, won't help the current idiocracy. Too bad school isn't designed to teach us to be money smart.

    We're all screwed, and that HAS to happen occasionally for the economy to truly live and breathe.
    Artificially stalling the down swing, and investing in "too good to be true" BS like unregulated mortgage investments is giving us a dose of greatly needed wake up.

    It will suck, and many will suffer, but for our economy to remain strong, it has to be weak on occasion.

    /rant

    *there are exceptions: high growth areas will increase in value, and then stabilize.

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  30. here's the 2008 census
    http://www.census.gov/hhes/www/housing/hvs/qtr208/q208tab4.html

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  31. I grew up in NVA. So Thats the last place on Earth I would ever want to live..In 2001 I bought a house in Wilmington NC. At the time I could barley afford it.I however got my Mortgage paid off in August 09. I thought it was a nightmare having a mortgage.In 2006 the company I contracted from went into BK and I almost lost it.From that time it took me 3 years to pay the remaing balance of 141k.I paid off all my credit cards and my vehicles.If you try hard..Really try hard you can get rid of that Nightmare called a mortgage. There is no reason I can see not to pay it off.Some people point out a tax credit but your Spending a Dollar to Save .30 cents....??Oh yeah what about investment...Hmm I lost around 50k in the first Tech stock crash and to look at my 401k now ah ahahaha.Pay off your Mortgage and your other bills.Do whatever you have to do to own your life its not easy but Freedom Never has been.

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  32. 3 years ago, a large chain store wanted to build out in my sticks, bought me out, and I was able to pay off the mortgage AND get the house moved to new property.
    Without a mortgage, I was able to make double/triple payments on my truck, and today the wife is paying off her (8-passenger fully loaded mini) van.
    Banks HATE people like me. I have NO credit cards, I now have NO notes of any kind, and only have to pay for utilities, insurance and food/gas/etc. They dont make a DIME on interest rates off us!
    I get credit card offers 2 and 3 times a week, but they get filed immediately int he circular file cabinet. We ONLY pay with cash-on-hand. If I want something, I SAVE for it.
    Now that both vehicles are paid off, and NO MORTGAGE, We will put money away for when the time comes when we need a new car.The same amount we were paying on her van will go into a savings account/CD.
    Yes, there are times the current wife is tempted to go get something on credit, but I calmly remind her of our financial goals: WE WILL NOT BE UNDER THE CONTROLLING THUMB OF SOME SCUM-SUCKING LENDER!! Paying almost 3 times the amount (after interest), just to GET IT NOW... ridiculous! BTW, I turn 43 this year and am self-employed as a consultant and handyman (not rich by any means).

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  33. Anonymous. You comment is great. I saved it. I don't believe in Debt. I live in Metro DC and will buy the cheapest house I can about an hour away in a rural area. Debt free is the only way to live. Usury is a form of Slavery. It sucks that mortgages artificially drive up prices and mess it up for all of us. Just like women working forces every woman to work destroying the family unit. (I have nothing against women working)

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